(navigation image)
Home American Libraries | Canadian Libraries | Universal Library | Community Texts | Project Gutenberg | Children's Library | Biodiversity Heritage Library | Additional Collections
Search: Advanced Search
Anonymous User (login or join us)
Upload
See other formats

Full text of "Hearing"

SAN FRANCISCO PUBLIC LIBRARY 



3 1223 



06835 6709 




vlfcf 



k 





San Francisco Public Library 



R] 






REFERENCE BOOK 

Sot to be taken from the Library 






iw 2-5 



gHEARING 

SENATE RULES COMMITTEE 

STATE OF CALIFORNIA 




DOCUMENTS DEPT. 

SEP - 4 2001 

SAN FRANCISCO 
PUBLIC LIBRARY 



STATE CAPITOL 

ROOM 3191 

SACRAMENTO, CALIFORNIA 

MONDAY, JULY 2, 2001 
1:45 P.M. 



3 1223 06835 6709 



434- R 



SENATE RULES COMMITTEE 
STATE OF CALIFORNIA 



HEARING 




STATE CAPITAL 




SACRAMENTO, CALIFORNIA 




MONDAY, JULY 2, 2 001 




1:45 P.M. 




Reported by: 




Michael J. Mac Iver, 




Shorthand Reporter 





PETERS SHORTHAND REPORTING CORPORATION 

333ft BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



4 49386 SFPL: ECONO JRS 
88 SFPL 07/07/03 6 



3 1223 03273 9808 



11 
APPEARANCES 
MEMBERS PRESENT 
SENATOR JOHN BURTON, Chair 
SENATOR ROSS JOHNSON, Vice Chair 
SENATOR BETTY KARNETTE 
SENATOR WILLIAM KNIGHT 
SENATOR GLORIA ROMERO 

STAFF PRESENT 
GREG SCHMIDT, Executive Officer 
PAT WEBB, Committee Secretary 

NETTIE SABELHAUS, Consultant on Governor's Appointments 
SUSIE SWATT, Consultant to SENATOR JOHNSON 
TIM SHELLEY, Consultant to SENATOR KARNETTE 
CHRIS BURNS, Consultant to SENATOR KNIGHT 
RYAN SHERMAN, Consultant to SENATOR ROMERO 

ALSO PRESENT 
ROY MABERY 

California Association of Black Correctional Workers 
RICHARD L. TATUM 

California Correctional Supervisors Organization 
CORBETT WILLIAMSON 
California Correctional Supervisors Organization 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 ,' (916) 362-2345 



Ill 
INDEX 
Proceedings 1 

Governor ' s Appointees ; 

JOSEPH W. HUSKEY, Warden 

California State Prison, Avenal 1 

Background and Experience 1 

Questions by SENATOR ROMERO re: 

What Does Avenal State Prison Do 

With Excess Money From Unfilled 

Staff Positions ; 2 

Questions by CHAIRMAN BURTON re: 

What is the Revised Shooting Policy 

at Avenal State Prison 2 

Proposed Generating Plant Near the 

Prison and Water Availability 2 

Questions by SENATOR KARNETTE re: 

What Needs to be Done About the 
Health Care Situation at Avenal 
State Prison 3 

Questions by SENATOR JOHNSON re: 

What is the Source of the Salary 

Savings Instructions 4 

Statement by SENATOR JOHNSON re: 

Truth In Budgeting and Salary 

Savings 5 

Witnesses in Support: 

ROY MAPERY 

California Association of Black 

Correctional Workers 5 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



IV 

Questions by SENATOR KARNETTE re: 

How Many Inmates Participate in 

the Foreign Prisoner Transfer 

Treaty 6 

Questions by CHAIRMAN BURTON re: 

Who Makes the Final Determination 

for Participation in the Foreign 

Prisoner Transfer Treaty ; 7 

Questions by SENATOR KARNETTE re: 

Are Inmates Encouraged to Apply 

for the Foreign Prisoner Transfer 

Treaty 8 

Witnesses in Support: 

RICHARD L. TATUM 

California Correctional Supervisors 

Organization 8 

Motion to Confirm 9 

Committee Action 9 

JOSEPH L. MC GRATH, Warden 

Pelican Bay State Prison 9 

Background and Experience 9 

Questions by CHAIRMAN BURTON re: 

Hunger Strike by 600 Pelican Bay 

State Prison Inmates 10 

Gang Affiliations and the Security 

Housing Unit 11 

Duration of Incarceration in the 

Security Housing Unit and Ways to 

Get Out 12 

Length of Inactive Gang Status Required 

to be Released from the Security 

Housing Unit 13 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 241). SACRAMENTO. CA 95827 ,' (916) 362-2345 



Violence Against Inmates that 

Disassociate from Gangs 13 

Questions by SENATOR ROMERO re: 

Prison Industry Authority Jobs 

at Pelican Bay State Prison 14 

Questions by SENATOR KARNETTE re: 

Are Inmates Encouraged to Apply 

for the Foreign Prisoner Transfer 

Treaty 15 

Is Education a Good Way to Reduce 

Violence in Prison 16 

Witnesses in Support: 

CORBETT W. WILLIAMSON 

California Correctional Supervisors 

Organization 17 

Questions by CHAIRMAN BURTON re: 

Scalding, Hot-Scrubbing Incident at 

Pelican Bay State Prison 18 

Sensitivity Training for New Guards and 
Refresher Courses for the Old Guards 20 

Expectations of the Staff at Pelican 

Bay State Prison 20 

Motion to Confirm 20 

Committee Action 20 

Termination of Proceedings 21 

Certificate of Reporter 22 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



1 

P-R-O-C-E-E-D-I-N-G-S 
— 00O00 — 

CHAIRMAN BURTON: Governor's appointees appearing 
today. Mr. Huskey. 

MR. HUSKEY: Yes, sir. 

CHAIRMAN BURTON: We have your statement for the 
record, and if you'd just like to make some brief comments. 

MR. HUSKEY: Yes. My career at the Department of 
Corrections and the State started about 41 years ago with 
the Department of Mental Hygiene and the Youth Authority for 
about three years. I joined the Department of Corrections 
on the opening of Susanville in 1963. There I worked my way 
up through the ranks from officer to Chief Deputy Warden. I 
made warden of Avenal State Prison in 1989. I retired in 
1993. I worked as a retired annuitant at three different 
institutions since then, and I was reappointed November of 
last year. 

CHAIRMAN BURTON: Now, you were a retired 
annuitant, now you're moving back in to full-time 
employment? 

MR. HUSKEY: That's correct, sir. 

CHAIRMAN BURTON: Questions from the Committee? 
Senator Johnson? 

SENATOR JOHNSON: No, questions. 

CHAIRMAN BURTON: Senator Romero? 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



2 

1 SENATOR ROMERO: Yes, thank you. Let me just ask 

2 at the prison do you feel every position, every staff 
position that's authorized by the Legislature, in the event 

4 that you do not, what do you do with those monies that are 

5 earmarked by the Legislature? 

6 MR. HUSKEY: There is a required salary savings 
level on each of the institutions and those positions are 

8 vacant — are filled back. In those few cases where we 

9 don't have the position filled because we're a rural area, 

10 we're in the process of filling them. 

11 CHAIRMAN BURTON: I see where you've revised your 

12 shooting policy. What was it and what is it? 

13 MR. HUSKEY: Oh, the shooting policy was 

14 redesigned significantly while I was off. When we came 

15 back, we have removed the lethal firearms from most of the 

16 posts and are dealing with less-than-lethal implements 

17 within the institution. We've gone through the use-of -force 

18 training for all of our staff to show that they were trained 

19 in the new policy and procedures. I've just finished up the 
2 second round in that just last month. 

21 CHAIRMAN BURTON: What's the issue with the 

22 proposed generating plant near the prison, and what's that 
2 3 going to do to your water availability? 

24 MR. HUSKEY: At this point we anticipate no impact 

25 on us . I've met with the mayor of the city, he's attempting 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



3 
to gain additional water rights from the local farmers to 
supply that agency, Duke Electric, and he's made no requests 
from us for changes. 

CHAIRMAN BURTON: So I'm missing something. So it 
won't be a problem, will be a problem, it's not a problem 
now but it could be a problem in the future? 

MR. HUSKEY: There's no indication of a problem at 
this point in time, no, sir. 

CHAIRMAN BURTON: And has anybody put up a warning 
flag for you? 

MR. HUSKEY: No, sir, not that I know of. 

CHAIRMAN BURTON: Okay. Senator Knight? 

SENATOR KNIGHT: No questions. 

CHAIRMAN BURTON: Senator Karnette? 

SENATOR KARNETTE: I know that health care is a 
consideration you do pretty well with and you do better than 
some cases. What do you think we need to do about that, the 
health care situation, because I know a lot of times inmates 
don't get the care they really need? 

MR. HUSKEY: Well — 

SENATOR KARNETTE: Maybe they get emergency, but 
I'm talking about regular health care, I know there's a 
problem. 

MR. HUSKEY: The problem is we are getting a 
sicker population to start with in all of the institutions, 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



4 
because the population is getting older among other things. 
2 But I don't think the Department of Corrections' ability to 
get the inmates to their doctors and for specialists is much 

4 beyond what most of us get in our HMO's. 

5 SENATOR KARNETTE : You say it's better there than 

6 or just as good? Well, I don't know, I just get concerned 
about that because I know there's difficulty getting people 

8 to work in it. 

9 MR. HUSKEY: Yes, there is. In our rural area it 

10 has caused some problems. I've been fortunate, I have a 

11 health care manager that's outstanding in recruitment, and 

12 when we look, from the vacancy plan, we're really in pretty 

13 good shape. 

14 SENATOR KARNETTE: Okay, thank you. 



15 SENATOR JOHNSON 

16 CHAIRMAN BURTON 

17 SENATOR JOHNSON 



Mr. Chairman? 

Yes, Senator Johnson. 

I'd just like to follow up on 
your lead, sir, to Senator Romero's question earlier about 
19 the 5 percent salary savings. What exactly is the source of 
2 those instructions, is it coming from headquarters in 

21 Corrections, is it coming from the Department of Finance, is 

22 it coming from the Governor, where is this idea coming from 
2 3 about the 5 percent salary budget? 

2 4 MR. HUSKEY: I believe it's coming from the 

25 Department of Finance, sir, and I believe — I didn't 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



5 
mention 5, I believe it's 4.9, if I'm not mistaken at this 
time. 

CHAIRMAN BURTON: A very precise number. Jerry, 
where is the 4 . 9 coming from? 

SENATOR JOHNSON: Were the Department of Finance 
as precise when they come before the Legislature with a 
budget that asks for a given number of positions. I think 
there's a real issue here, not with this nominee, but a real 
issue about truth in budgeting. If they come before the 
Legislature and say we need this, if they don't really think 
they need this, then why don't they tell us what they really 
want to spend the money for? That's not your problem and 
I'm not directing it at you, but your answer certainly leads 
to a lot more questions. 

CHAIRMAN BURTON: Are we talking salary savings? 

SENATOR JOHNSON: Right. 

CHAIRMAN BURTON: Well, we've given salary savings 
as long as I've been raising a voice, not that I have ever 
quite understood it, but they always give people 100 bucks 
and expect them to only spend 95. 

SENATOR JOHNSON: It's like three card monte or 
the bead in the shell. Don't play that game because you'll 
wind up losing. 

SENATOR BURTON: Witnesses in support. Go ahead. 

MR. MAPERY: Go afternoon, Senator Burton, 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 24U. SACRAMENTO. CA 95827 / (916) 362-2345 



6 

1 Chairman Burton, and the Rules Committee members. My name 

2 is Roy Mapery, I'm the state president of the Association of 
Black Correctional Workers. I'm here today to give support 

4 for both candidates, for the sake of time, and Senator 

5 Burton I want you to know we missed you during the last 

6 hearing, but Senator Johnson did a fine job. 

7 CHAIRMAN BURTON: You're not term limited in that 

8 job, are you? 

9 (Laughter. ) 

10 MR. MAPERY: We're not. Thank you. 

11 CHAIRMAN BURTON: Thank you. 

12 SENATOR KARNETTE : Senator Burton, while he's 

13 coming up I forgot a question that I had. 

14 We had a hearing last week about immigrants applying for 

15 release to their home country and I forgot to ask about 

16 that. I'm just wondering how many — are there immigrants, 

17 prisoners who want to go — how many people apply to go back 

18 to their home country? 

19 MR. HUSKEY: Well, there's a process which through 

20 the Foreign Prisoner Transfer Treaty — 

21 SENATOR KARNETTE: Transfer, yes. 

22 MR. HUSKEY: But it's initiated when they come 
2 3 into the institution, they are given an opportunity, the 
2 4 program's explained to them. They fill out a form if 

25 they're interested in it. When they get to the receiving 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95S27 / (916) 362-2345 



7 
institution, the additional forms and the evaluation is done 
and sent to the Board of Prisons and Probation. I think the 
numbers are pretty small, because most of those I talked to 
through the years really are not interested in going back to 
their home country. 

CHAIRMAN BURTON: Who has the final determination? 

MR. HUSKEY: Their nation does, but it's referred 
through the Board of Prison Terms. 

CHAIRMAN BURTON: Well, I know the situation of a 
Swedish citizen who they are more than happy to take her 
back and have her serve whatever time she served here, and 
it's not working and I don't know who calls the final shot. 
I mean the warden, the director, Presley, the Governor, 
whom? 

MR. HUSKEY: The Board of Prison Terms, sir. 

CHAIRMAN BURTON: Not the Governor? 

MR. HUSKEY: No. Well, the Board of Prison Terms 
is appointed by the Governor, I don't know if he's involved 
with it or not, I can't say that. The responsibility is on 
the Board of Prison Terms . 

CHAIRMAN BURTON: Michael, what? 

MR. O'NEIL: That's correct. 

CHAIRMAN BURTON: What is correct. 

MR. O'NEIL: The Board of Prison Terms reviews the 
request, sends them to the United States Department of 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240, SACRAMENTO. CA 95827 (916) 362-2345 



8 

1 Justice, and if they're returned, then the Board of Prison 

2 Terms is the final arbiter and — 

3 CHAIRMAN BURTON: Are you familiar with the case 

4 I'm talking about? 

5 MR. O'NEIL: No, sir. 

6 CHAIRMAN BURTON: We'll make you familiar with it. 

7 Okay. 

8 SENATOR KARNETTE : Also, Senator Burton, there 

9 were some concerns about whether or not people were 

10 encouraged to actually apply. I got the feeling that they 

11 would just say, well, you're not going to get it anyway and 

12 they didn't even apply in some prisons. So are they 

13 encouraged to apply? 

14 MR. HUSKEY: They are not only polled on when they 

15 initially come in, but they're asked again if they'd like to 

16 go at each annual classification and that's documented. 

17 SENATOR KARNETTE: But the Board of Prison Terms, 

18 they only get a few, that was very surprising. 

19 MR. HUSKEY: My experience has been that most of 
2 the inmates we talked to were not interested in going back 

21 to their country to serve their time. 

22 SENATOR BURTON: The only two I heard of were, 

23 didn't get a chance to do it. Witnesses in opposition — 

24 oh, I'm sorry, sir, you're up next. We lost you. 

25 MR. TATUM: Good afternoon, Mr. Burton and Members 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO, CA 95827 / (916) 362-2345 



9 
of the Committee. I'm Richard Tatum, I'm the state 
President of the California Correctional Supervisors 
Organization. I'm here today to support Mr. Huskey. I 
think that his vast experience with the California 
Department of Corrections, his open-door policies with his 
supervisors and employees, has pretty well spoken for itself 
over the years. Basically, we like to see him and he's the 
type of guy that we need within the Department of 
Corrections. That's all I have. Thank you. 

CHAIRMAN BURTON: Witnesses in opposition. If 
not, move by Senator Johnson? 

SENATOR JOHNSON: So moved. 

CHAIRMAN BURTON: Call the role. 

MS. WEBB: Senator Karnette? 

SENATOR KARNETTE: Aye. 

MS. WEBB: Karnette Aye. Senator Knight? 

SENATOR KNIGHT: Aye. 

MS. WEBB: Knight Aye. Senator Romero? 

SENATOR ROMERO: Aye. 

MS. WEBB: Romero Aye. Senator Johnson? 

SENATOR JOHNSON: Aye. 

MS. WEBB: Johnson Aye. Senator Burton? 

SENATOR BURTON: Congratulations, sir. 
Mr. Mc Grath. We have your statement for the record, sir, 
so if you could — 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 24<). SACRAMENTO. CA 95827 / (916) 362-2345 



10 
1 MR. MC GRATH: Yes, sir. Mr. Chairman and Members 

of the Committee, I'd like to thank you for having me here 

today to give you my credentials to be the warden at Pelican 
4 State Prison. You've got a copy of my resume. I've been in 

Corrections or in the correctional agency for over 22 years. 
6 The first three and a half years with the California Youth 

Authority, and the last 19 or so in the Department of 

8 Corrections . 

9 I have worked at all levels in the prison system, 

10 from entry level up to my current position. I have been at 

11 Pelican Bay State Prison since 1994. I went there as an 

12 associate warden. 

13 CHAIRMAN BURTON: You're aware of the fact that, I 

14 guess, since yesterday over 600 inmates in the Security 

15 Housing have refused like four meals. You know, I mean, 

16 why? 

17 MR. MC GRATH: Yes, Mr. Chairman, I am. I was 

18 informed last evening that a group of inmates had not taken 

19 their evening meal, and I was informed this morning — and 

20 that number was about 645. I was informed this morning that 

21 there were 62 9 who did not take their breakfast meal. These 

22 are inmates that are housed in the Security Housing Unit of 

23 the prison. There are approximately 1,200 inmates in the 

24 Security Housing Unit, and this is actually the prison 

25 within the prison system. These 1,200 beds house the 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240, SACRAMENTO, CA 95827 / (916) 362-2345 



11 

individuals who have committed crimes throughout — 

CHAIRMAN BURTON: Right. But why are they 
refusing food is the question? 

MR. MC GRATH: Yes, yes. I was just trying to 
give you a little background. 

CHAIRMAN BURTON: Okay. 

MR. MC GRATH: The reason they are refusing the 
food, as I understand it — now I only have two that I know 
of that have made an official declaration that I'm on a 
hunger strike and here's why. But my understanding is that 
they are protesting the fact that we have the Security 
Housing Unit and that we manage prison gangs with housing 
them in the Security Housing Unit. This issue has been 
challenged in court on a couple of occasions, and on each 
occasion we have been successful in defending the program 
that we have for this small group of California prisoners. 

CHAIRMAN BURTON: Well, do you put them in the SHU 
because they have done something, or do you put them in the 
SHU because they're associated with people who did 
something? In other words, if because they have an 
association with a group of cons, as opposed to they've 
misbehaved? 

MR. MC GRATH: All of that is looked at, in terms 
of getting a term in the Security Housing Unit, you can do 
that for committing a specific crime. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO, CA 95827 / (916) 362-2345 



12 
CHAIRMAN BURTON: Yes. 
2 MR. MC GRATH: You could also be placed there on 

indeterminate status based on your validation as a member of 

4 a prison gang which is known to be involved in criminal 

5 conspiracies. 

6 CHAIRMAN BURTON: So they could be there forever 
and a day even if they didn't do anything except they were 

8 associated with a group? 

9 MR. MC GRATH: Well, there are ways out, and one 

10 of the ways for them to get out is to debrief and 

11 disassociate themselves from the gang. 

12 CHAIRMAN BURTON: Maybe at the cost to their 

13 physical safety or something? 

14 MR. MC GRATH: There are issues with the factions 

15 in prison and there are safety concerns with an individual 

16 that's in a gang and decides to no longer be in a gang. 

17 We've done pretty well in working with them and protecting 

18 them. 

19 But there is another way out, and the other way 

20 out is we began this past year in reviewing all of the cases 

21 that are in there on the determinate gang status, and we've 

22 reviewed 450 plus individuals to determine not just are they 

23 validated in a gang, but to determine are they involved in 

24 gang activities, are they currently presenting a threat. 

2 5 Those that have no documentation of gang activity 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



13 
in the last six years are placed on inactive status and then 
they are sent to a Departmental Review Board and they are 
released. In the past 12 months we have released about 117 
out of that population to general population based on their 
inactive status. 

So there are ways out, but we have to be sure that 
they are not involved in those criminal activities before we 
can safely put them — 

CHAIRMAN BURTON: What's the magic of six as 
against four or five? 

MR. MC GRATH: Six was a number that the 
Department came up with as a departmental program to 
determine a period of time where we know they haven't been 
involved in these criminal activities. That's the number 
that was given to me, and that's the number that we have 
used. 

CHAIRMAN BURTON: So they basically, as with a lot 
of these stupid things, plucked it out of the air? It could 
have been six, it could have been seven, it could have been 
five, it could have been four? 

MR. MC GRATH: I think it probably could have been 
whatever it was chosen to be, but it certainly needed to be 
a significant amount of time because although we may not 
have documentation, we need to be fairly certain that they 
are not involving themselves in these activities because 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



14 
people's lives are in the balance. 

2 CHAIRMAN BURTON: So if somebody disassociates 

3 themselves and moves out, has there ever been any violence 

4 against them? 

5 MR. MC GRATH: I'm certain somewhere along the way 

6 there has been, but I think our track record has been very 
good. We have a transitional housing unit, they come out, 

8 they go through the program, they get placed in the 

9 population with other individuals with like circumstances. 

10 They are able to work and go to school and have a very 

11 productive prison life. And we have not had an issue with a 

12 lot of them being hurt. 

13 CHAIRMAN BURTON: Senator Johnson? 

14 SENATOR JOHNSON: No questions, Mr. Chairman. 

15 CHAIRMAN BURTON: Senator Romero? 

16 SENATOR ROMERO: Can you describe and tell me 

17 about the Prison Industry Authority jobs that you have at 

18 Pelican Bay? 

19 MR. MC GRATH: Yes, Senator. We have presently 

20 several Prison Industry programs. We have an optical lab 

21 where we do — we make eye glasses for Medi-Cal and for our 

22 inmates and for state agencies. We have a laundry prison 
2 3 industries program where we do laundry for the entire 

24 facility. We have a dry cleaning program, and we have a 

25 shoe factory where we make shoes for the inmates at our 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



15 
prison, as well as throughout the system. 

SENATOR ROMERO: And how many inmates are involved 
in this? 

MR. MC GRATH: When the programs are up and fully 
running, I would say in the neighborhood of three to four 
hundred, because we have different numbers in ' the different 
programs. But in the shoe for example — shoe factory, you 
can have up to 75, 80 inmates, the same is true in the 
optical and the laundry and any programs. 

SENATOR ROMERO: Okay. 

CHAIRMAN BURTON: Senator Karnette? 

SENATOR KARNETTE: You have probably heard me ask 
about the immigration, the immigration question. Do you 
feel like that all of the inmates are given the opportunity 
to apply to go back to their home country, are they 
encouraged in Pelican Bay? 

MR. MC GRATH: Yes, ma'am. When that program 
first came out three or four years ago, we went through and 
offered it to every single inmate formally on paper. The 
problem that we have had at Pelican Bay, although we do — 
we do renew this in front of them every year as Mr. Huskey 
said in their annual classification, the problem we have is 
that one of the exclusionary factors is if you are a life 
prisoner without a parole date, you're immediately 
ineligible, or if you were in the country five years prior 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



16 

1 to your incarceration, you're ineligible. And when you look 

2 at our population, which is about 50 percent life prisoners 
without parole dates, off the top, half the prisoners at 

4 Pelican Bay don't qualify for this program. 

5 We still make it available to them, we ask them, 

6 we do send their requests forward, but I have to agree that 
we haven ' t had a lot of individuals that have been 

8 interested in the program. 

9 SENATOR KARNETTE : I also have another question 

10 about education. If they have no idea when they'll get out, 

11 does education still seem a good way to keep down violence? 

12 MR. MC GRATH: I think education is vitally 

13 important in prison. I believe the very tools that help to 

14 make an individual successful on parole are the very same 

15 tools that help us to manage them while they are 

16 incarcerated. It's a self-esteem issue. It's feeling like 

17 they can learn, that they have importance, they have value. 

18 Education, I believe, does those things, and we 

19 have continued to use education, even in the rocky times 

2 that we've had at Pelican Bay, by getting innovative with 

21 doing some cell-study programs, we're doing a GED express 

22 program, we're even doing this with individuals in the 
2 3 Security Housing Unit. 

24 SENATOR KARNETTE: It gives them something to do 

2 5 and something to think about? 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



17 

MR. MC GRATH: Yes, Senator. And I believe it's a 
valuable tool that we would be making a mistake not to use 
in our prison. 

CHAIRMAN BURTON: Senator Knight? 

SENATOR KNIGHT: No questions. 

CHAIRMAN BURTON: Witnesses in support, we had 
them. Witnesses in — in support or opposition, sir? 

MR. WILLIAMSON: In support, sir. 

CHAIRMAN BURTON: All right. Just move right up 
here. 

MR. WILLIAMSON: My name is Corbett W. Williamsom. 
I'm a correctional lieutenant at Pelican Bay and the chapter 
president for the Pelican Bay State Prison chapter of the 
California Correctional Supervisors Organization. And we 
wanted to — 

CHAIRMAN BURTON: Do you guys support Senator 
Brulte's bill? 

MR. WILLIAMSON: Which number, sir? 

CHAIRMAN BURTON: That could raise your pay. 

MR. WILLIAMSON: I don't know, that's probably 
been supported many times . 

CHAIRMAN BURTON: It's on that subject of 
collective bargain, right? 

MR. WILLIAMSON: Yes, sir. 

I, like a lot of the supervisors at Pelican Bay, 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



1 

2 
3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 























18 


have been 


there 


since 


it opened 


in 


1989 


and 


many of us 


have 


had the p] 


.easure 


of 


working direct 


ly for 


Mr. 


Mc 


Grath 


prior 


to his assuming 


the 


position of 


warden, 


and 


our 


supervisory 


staff are 


pretty 


we 


LI 


unanimous 


in 


their 


praise 


of 





Mr. Mc Grath ' s knowledge, management ability, and one of the 
most important things are his people skills he possesses in 
dealing with both the staff and the inmate. 

As CCSO chapter president, I've had a lot of 
opportunities to discuss issues of supervisory concern with- 
Mr. Mc Grath, and during these discussions Mr. Mc Grath has 
always been open, honest, and willing to discuss and attempt 
to resolve the issues the supervisors have working at the 
prison. As an employee organization, there's not a lot more 
that we can ask. 

In closing, I'd just like to say that the most 
telling point in Mr. Mc Grath ' s management of the difficult 
and sometimes violent environment is reflected by the staff 
employee here. The comments of the many official visitors 
who pass through the institution are consistent when they 
talk about the high morale and the professionalism in their 
encounters with staff. 

Although Mr. Mc Grath would say all the credit 
belongs to these staff, in reality the high morale and 
professionalism, I believe, are direct reflections of his 
leadership. Thank you. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 24<). SACRAMENTO. CA 95827 , (916) 362-2345 



19 

CHAIRMAN BURTON: I guess I should ask the warden 
too, but you were supervising for your warden during the so 
called scalding, hot-scrubbing incident that allegedly 
happened at Pelican Bay? 

MR. MC GRATH: No, Senator, I wasn't at Pelican 
Bay when that happened. That occurred in about 1992. 

CHAIRMAN BURTON: I thought it was before that. 
It took that long to come to light? 

MR. MC GRATH: That was brought out in the Madrid 
versus Gomez case, class-action case. It went to trial in 
1993 in the Northern District Court, and the decision was 
rendered by Judge Henderson in January of '95. But the 
event you're describing was — 

CHAIRMAN BURTON: I thought it was later than that 
for some reason. You were there then? 

MR. WILLIAMSON: Yes, sir. 

CHAIRMAN BURTON: Do you want to comment on that 
at all? 

MR. WILLIAMSON: On the thing with Von Dorch, I 
don't have any personal first-hand knowledge of it because I 
wasn't working in that area when it occurred. But the fact 
that did it occur, I never saw any facts on it. But like I 
say, I wasn't there personally. 

CHAIRMAN BURTON: So stuff like that doesn't 
happen anymore, Warden? 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



20 
MR. MC GRATH: No, sir. It's not happened since 

2 I've been there. I have been there since April of 1994, and 
I believe I was the first piece of the new administration 

4 that came in to take a look at all of those issues. 

5 CHAIRMAN BURTON: And like with the guards and 

6 that they as a result, because of the type of people they're 
dealing with, the inmates, I mean do the new ones that come 

8 in, the old ones get refresher courses on, I guess to use a 

9 stupid phrase, sensitivity training or something? 

10 MR. MC GRATH: I believe what really happens is 

11 that the correctional professionals give you what you ask 

12 for, and you need to set expectations, and my expectation is 

13 professionalism, they're trained properly, and then they are 

14 given the tools they need to do their job. 

15 CHAIRMAN BURTON: Well, how about do you give them 

16 stuff not to do? 

17 MR. MC GRATH: Absolutely. Absolutely. Their 

18 training talks about what force is, what appropriate force 

19 is, and how it's to be conducted and how it's to be 

2 reported. The bottom line is at Pelican Bay we're doing 

21 business on top of the table, and I think our employees can 

2 2 go home and feel good about what they've done and not worry 

23 about hiding anything at this point in our evolution. I 

24 think we've made great strides. 

2 5 CHAIRMAN BURTON: Witnesses in opposition? 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



21 



Move by Senator Johnson? 

SENATOR JOHNSON: Yes, sir. 
CHAIRMAN BURTON: Call the role. 
MS. WEBB: Senator Karnette? 
SENATOR KARNETTE: Aye. 

MS. WEBB: Karnette Aye. Senator Knight? 
SENATOR KNIGHT: Aye. 
MS. WEBB: Senator Romero? 
SENATOR ROMERO: Aye. 

MS. WEBB: Romero Aye. Senator Johnson? 
SENATOR JOHNSON: Aye. 

MS. WEBB: Johnson Aye. Senator Burton? 
CHAIRMAN BURTON: Aye. Congratulations, sir. 
(Thereupon this portion of the Senate 
Rules Committee hearing was terminated 
at approximately 2:25 p.m.) 

— 00O00 — 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



22 

CERTIFICATE OF SHORTHAND REPORTER 
2 I, MICHAEL J. MAC IVER, a Shorthand Reporter, do hereby 
certify that I am a disinterested person herein; that I 

4 reported the foregoing Senate Rules Committee proceedings in 

5 shorthand writing; that I thereafter caused my shorthand 

6 writing to be transcribed into typewriting. 

7 I further certify that I am not of counsel or 

8 attorney for any of the parties to said Senate Rules 

9 Committee proceedings, or in any way interested in the 

10 outcome of said Senate Rules Committee proceedings. 

11 IN WITNESS WHEREOF, I have hereunto set my hand 

12 this 22st day of July 2001. 
13 
14 
15 
16 
17 

18 Michael J. Mac Iver 

19 Shorthand Reporter 
20 
21 
22 
23 
24 
25 




PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO, CA 95827 / (916) 362-2345 



434-R 
Additional copies of this publication may be purchased for $3.00 per copy 
(includes shipping and handling) plus current California sales tax. 

Senate Publications 

1020 N Street, Room B-53 

Sacramento, CA 95814 

(916)327-2155 

Make checks payable to SENATE RULES COMMITTEE. 
Please include Stock Number 434-R when ordering. 



A*- IL 



^HEARING 

SENATE RULES COMMITTEE 

STATE OF CALIFORNIA 




DOCUMENTS DEPT. 

SEP - h 200! 

SAN FRANCISCO 
PUBLIC LIBRARY 



STATE CAPITOL 

ROOM 3191 

SACRAMENTO, CALIFORNIA 

MONDAY, JULY 9, 2001 
1:45 PM. 



435- R 



SENATE RULES COMMITTEE 
STATE OF CALIFORNIA 



HEARING 



STATE CAPITOL 
SACRAMENTO, CALIFORNIA 



MONDAY, JULY 9, 2001 
1:45 P.M. 



Reported by: 

Michael Mac Iver, Shorthand Reporter 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 I (916) 362-2345 



11 
APPEARANCES 
MEMBERS PRESENT 
SENATOR JOHN BURTON, Chair 
SENATOR ROSS JOHNSON, Vice Chair 
SENATOR BETTY KARNETTE 
SENATOR WILLIAM KNIGHT 
SENATOR GLORIA ROMERO 

STAFF PRESENT 
GREG SCHMIDT, Executive Officer 
PAT WEBB, Committee Secretary 

NETTIE SABELHAUS , Consultant on Governor ' s Appointments 
SUSIE SWATT, Consultant to SENATOR JOHNSON 
TIM SHELLEY, Consultant to SENATOR KARNETTE 
CHRIS BURNS, Consultant to SENATOR KNIGHT 
RYAN SHERMAN, Consultant to SENATOR ROMERO 

ALSO PRESENT 
CHARLES REED, Chancellor 
California State University 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95S27 / (916) 362-2345 



Ill 
INDEX 

Page 
Proceedings 1 

Governor ' s Appointees : 

WILLIAM HAUCK, Member 

Board of Trustees 

California State University 1 

Background and Experience 1 

Questions by SENATOR ROMERO re: 

Advancement of Students in the 

California State University System 2 

Labor /Management Negotiation of 

Contracts and the Current Practice 

of Asking Employees to Give Up Due 

Process Rights in Exchange for Salary 3 

Questions by CHAIRMAN BURTON re: 

What Can the Board of Trustees Do 

to Make Students Aware of the 

Availability of Cal Grants 5 

Witness: 

CHARLES REED 

Chancellor 

California State University 6 

WILLIAM HAUCK, continued: 

Questions by SENATOR KNIGHT re: 

In-state Tuition to Illegal Immigrants 8 

Questions by SENATOR KARNETTE re: 

The CSU's Ability to Provide a 

Doctorate of Education 8 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



Questions by CHAIRMAN BURTON re: 

What is the Policy of California 
Resident Versus Out-of-State for 
Admittance to the CSU 9 

Motion to Confirm 10 

Committee Action 10 

KYRIAKOS TSAKOPOULOS, Member 

Board of Trustees 

California State University 10 

Background and Experience 10 

Questions by SENATOR ROMERO re: 

What is the State of Labor /Management 

Negotiations and How Can They Be 

Improved 12 

Redirection Policy for Impacted 

Programs .13 

Keeping the SAT As Part of the 

Evaluation Criteria 14 

Statement by SENATOR ROMERO re: 

The Correlation Between the SAT and 

Students ' Academic Achievement 15 

Statement by SENATOR JOHNSON re: 

The Correlation Between the SAT and 

Students ' Academic Achievement 15 

Motion to Confirm 17 

Committee Action 17 

Termination of Proceedings 18 

Certificate of Reporter 19 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



1 

P-R-O-C-E-E-D-I-N-G-S 
— 00O00 — 

CHAIRMAN BURTON: Today we have William Hauck, 
Member of the Trustees of the California State University. 

Go ahead. 

MR. HAUCK: Thank you Senator Burton and Members of 
the Committee. I'm pleased to be here today, and it's been 
a privilege for me to serve on the Trustees for the last 
eight years, and I hopefully am looking forward to serving 
one more term. 

I'm a product of the CSU system, I graduated from 
San Jose State more years ago than I'd like to remember, and 
I am very dedicated to the students in our system. I also 
think that the CSU plays a critical role in California's 
economy, and really it's an inspiration to go out on these 
campuses and see the young people that are coming through 
the system. 

And just briefly, recently I was the commencement 
speaker at Cal State LA, and one of the things I did in the 
course of that was to ask every graduate who was the first 
in his family or her family to stand up, and I would say 
that almost half of the graduates that were seated on the 
field that day stood up when I asked them to do that. And I 
mean it is a real inspiration, you know, and very 
gratifying, frankly, to see that, you know, we are educating 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



2 
young people who are the first in their family to get a 
college degree, that's certainly going to be good for them 
personally and I think it ' s going to be very good for 
California. 

Senator, I think I would end my remarks at that 
point and I'd be happy to entertain questions . 

CHAIRMAN BURTON: Senator Johnson? 

SENATOR JOHNSON: No questions. 

CHAIRMAN BURTON: Senator Karnette? 

SENATOR KARNETTE: No questions. 

CHAIRMAN BURTON: Senator Romero? 

SENATOR ROMERO: Thank you. I had a couple of 
questions. Let me start first with the advancement of 
students in the Cal State system. I was a former faculty 
member in the Cal State system, Cal State LA specifically. 

MR. HAUCK: All right. 

SENATOR ROMERO: There's a concern, especially in 
the graduate-level programs, that students are brought in to 
the program, the masters ' -level courses and then stay there, 
with very little counseling opportunities, so that the rates 
of graduation, termination at the masters' level. I'm 
curious if you've had any discussion about this and what you 
would do as a Trustee to look into this concern of opening 
up the doors, admitting students in, taking their money, but 
not having the courses or the support system to move 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



3 
students out? 

MR. HAUCK: Senator, I'm not aware of that as a 
problem, but if that is, in fact, if what you say is true, 
it would be — certainly be a concern, and I will pursue 
that with the chancellor and with his staff to determine 
whether that's what's happening, and if it is, why. I think 
we would address that. 

SENATOR ROMERO : Okay . And again , it's 
observational at this point, I spoke with the faculty on 
different campuses . It would be something that I would hope 
perhaps that the trustees could maybe begin to take a look 
at this. 

A second question, let me ask, is regarding 
labor /management relations in the CSU. I think there have 
been some difficulties in negotiation of contracts. I'd 
like to ask what are your thoughts on the state of 
labor /management relations, some of the causes, and your 
view, in terms of looking at even when we go to the 
bargaining table for openers, some of the past practices and 
current practices of asking employees to give up basic due- 
process rights in exchange for the possibility of a salary 
increase. What are your views on those for openers and what 
those negotiations should look like? 

MR. HAUCK: Well, first I want to be clear that, 
you know, what I say is outside the process, the collective 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 24(1. SACRAMENTO. CA 95827 / (916) 362-2345 



4 
bargaining process, that we are currently in the middle of 
with the California Faculty Association. So just in 
general, from my standpoint our relationship with the 
faculty and with the faculty union is the most important 
issue that we are faced with at the moment that we need to 
deal with. The faculty is responsible for training these 
young people that we see when we go to the campuses and that 
we see when we go to graduations like the Cal State LA 
graduation. 

So I think that the board and the chancellor's 
office — the chancellor needs to address every issue that 
we have with the faculty across the board and hopefully, you 
know, out of that process get to a point where we have not 
only a good contract from the standpoint of the faculty and 
as well from the standpoint of the State, but that we have 
good relations with the faculty and that we don't get into 
the kinds of cycles that we've been in where every three 
years we seem to be in a contentious situation. So, I mean, 
I can say to you that it's a very high priority for me and, 
I think, for the board to deal with these issues. 

SENATOR ROMERO: Thank you. 

CHAIRMAN BURTON: Senator Knight? 

SENATOR KNIGHT: No, thank you. 

CHAIRMAN BURTON: Well, I'll ask one question. 
All right. As you know we passed a very historic Cal Grant 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



5 
program last session and yet the number of Cal Grant awards 
seems to be down, as opposed to up, and what kind of steps 
can the CSU Trustees take to, one, get the information out 
both to college graduates who are applying and students that 
are there now to make sure that, you know, students who are 
eligible will take advantage of this? 

MR. HAUCK: That's a good question, Senator. 

CHAIRMAN BURTON: I thought it was. 

MR. HAUCK: And that's why you asked it. I think 
the answer, or at least a beginning of an answer to your 
question is we need to require each of our presidents of the 
23 schools to in their areas, in their so-called market 
areas, to reach out to every high school and to the 
counselors at every high school to make sure that they're 
aware of the availability of the Cal Grant program, because, 
obviously, it does no good to pass that measure and then not 
utilize it to the extent that it needs to be. And we are 
not doing that currently. So we are going to ask every one 
of our presidents to be sure that they have personal and 
direct contact with each high school in their area to make 
the point that this Cal Grant availability is there. 

CHAIRMAN BURTON: And also, I guess, on their own 
campuses for the students that are there now that may not 
have — 

MR. HAUCK: Sure. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



6 

CHAIRMAN BURTON: — been eligible? 

MR. HAUCK: Sure. 

CHAIRMAN BURTON: CSU, as I understand it, at one 
time had some institutional aid programs for students? 

MR. HAUCK: Institutional aid? 

CHAIRMAN BURTON: I mean financial aid at each 
institution? You're nodding your. head. 

MR. HAUCK: Yes, sir. 

CHAIRMAN BURTON: I'm having trouble with this 
because whoever gave us the question it made no sense 
whatsoever. But assuming that you have the Cal Grant 
program that makes almost everybody, you know, eligible, 
what would maybe — Chuck would know this one. What would 
happen and how would you deal with the institutional 
financial aid? Charles — I mean, do you mind if we bring 
up the man there? We're happy to have him come up here. 

MR. REED: Senator, we are maintaining and also 
increasing the institutional financial aid and — 

CHAIRMAN BURTON: Now, who would get — in other 
words , in theory an individual could get that in addition to 
Cal Grant, or if people somehow fall between a Cal Grant 
would get that or what? 

MR. REED: That is correct. 

CHAIRMAN BURTON: That was an either /or. Either 
one or both? 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



7 

MR. REED: Both. 

CHAIRMAN BURTON: Okay. 

MR. REED: Senator, also, you know, in addition to 
the board, we were very disappointed this summer to find 
that the number of Cal Grants were not what we had 
anticipated. 

In addition to what Trustee Hauck said, we're 
going to do three things . We ' re going to personally contact 
by mail every student that did not get a Cal Grant that ' s 
eligible when they appear on our campus this fall. Two, 
we're distributing this July 150,000 posters to every middle 
school and every high school and every classroom, so that 
they can put up on the wall a poster about how to go to 
college, and one part of that poster is going to include the 
Cal Grant information and where and how to apply for that. 
And thirdly, this summer there are statewide meetings of the 
school counselors and school advisors and we're attending 
those meetings and asking those school counselors to really 
work very hard at pitching the Cal Grant. 

CHAIRMAN BURTON: All right. Thank you very much, 
Chancellor. 

Any other questions, Senator Knight, did one pop 
to your mind during — 

SENATOR KNIGHT: Yes, I'll go ahead and ask him a 
question. I'm interested in your position on providing in- 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 , (916) 362-2345 



8 
state tuition to illegal immigrants, and the reason I ask 
that is that I guess our obligation is to provide an 
education to all the children in this country regardless, 
and we fulfill that obligation when we provide them with a 
high school education, and if we now give them a further 
benefit we are depriving, I think, somebody within the state 
of that ability. So do you have a position on that? 

MR. HAUCK: Senator, I believe it is a matter that 
is before the legislature and I think we would leave it to 
your wisdom to make that decision — 

SENATOR KNIGHT: That's what I thought. 

MR. HAUCK: — to implement whatever your decision 
is. 

CHAIRMAN BURTON: Go ahead, Senator Karnette. 

SENATOR KARNETTE: I am interested in how you're 
going to approach the doctoral program, we talked a little 
bit about that — 

MR. HAUCK: Uh-huh. 

SENATOR KARNETTE: — with CSU and what your 
opinion of that is, the CSUs being able to offer a doctorate 
in education is the way I understand it? 

MR. HAUCK: Right. 

SENATOR KARNETTE: That's all? 

MR. HAUCK: Right. The Ed.D. 

SENATOR KARNETTE: The Ed.D.? 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 ' (916) 362-2345 



9 

MR. HAUCK: Yes. Well, personally I would favor 
that. I believe that it's important for California to be — 
to provide that degree to those folks, particularly those 
people working in school districts throughout the state who 
need the degree to advance, and I don't believe that the 
degree is being provided by the university, at least at the 
level that it needs to be. And secondly, I think we need to 
provide that in an affordable way and the private 
universities today are not doing that. The cost to get an 
Ed.D. from a private university can be anywhere from forty 
to fifty thousand dollars. That will not fill the bill for 
the people that we serve. So I would personally favor it. 

CHAIRMAN BURTON: It's been called to my attention 
that Cal Poly San Luis — what is the policy of the State — 
and I really have trouble saying State University having 
graduated from a State College, but what — kind of like 
being a doctor of law. What is the policy versus California 
resident versus out-of-state as far as, I guess, priority of 
admittance, or is there one? 

MR. HAUCK: The priority is for students within 
the state. 

CHAIRMAN BURTON: Well, Cal Poly seems to treat 
them all equally, and I don't know if that's good, bad, or 
indifferent, that's what they say. That's what they said. 
I mean you may want — I think it ' s something that you may 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



10 
want to look at because you may just want to look at it. 

MR. HAUCK: Okay. 

CHAIRMAN BURTON: Okay. Any other questions? Any 
witnesses in support? Any witnesses — is Governor Wilson 
coming in to show support? 

MR. HAUCK: No. 

CHAIRMAN BURTON: Move by Senator Johnson? 

SENATOR JOHNSON: So moved. 

CHAIRMAN BURTON: Call the roll. 

MS. WEBB: Senator Knight? 

SENATOR KNIGHT: Aye. 

MS. WEBB: Knight Aye. Senator Romero? 

SENATOR ROMERO: Aye. 

MS. WEBB: Romero Aye. Senator Johnson? 

SENATOR JOHNSON: Aye. 

MS. WEBB: Johnson Aye. Senator Burton? 

CHAIRMAN BURTON: Aye. Congratulations, William 

MR. HAUCK: Thank you. 

(Thereupon SENATOR KARNETTE 
was recorded as an Aye vote, 
making the final vote five to 
zero. ) 

CHAIRMAN BURTON: Kyriakos Tsakopoulos, Member, 
Trustees of the California State University. 

MR. TSAKOPOULOS: Mr. Chairman, Committee Members, 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



11 

my name is Kyriakos Tsakopoulos, and I'm honored to be 
before you and to briefly share my thoughts about the 
California State University system. I take great pride in 
being affiliated with the CSU system, the nation's largest 
system of higher education, which contributes substantially 
to California's schools, economy, culture, and future. 

If I am confirmed as a Trustee of the CSU system, 
I will exercise my best independent judgment and work 
constructively with the Board of Trustees, the CSU 
administration, the faculty, and student representatives, as 
well as continuing to consult with both the executive and 
legislative branches to further three simple goals: To 
exercise prudent judgment in supervising over all aspects of 
the CSU system, to provide access for as many students as 
possible to a quality higher education, and to keep tuition 
and fees to a bare minimum. 

I ' ve had the opportunity to meet with Committee 
members and their staff and to answer some of their 
questions recently, and hope to do so in the future. I ask 
that my previously submitted written statement be entered 
into the record. 

CHAIRMAN BURTON: Without objection. 

MR. TSAKOPOULOS: I thank the Committee for its 
time and I'm happy to try and answer any of the Committee's 
questions . 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 ; (916) 362-2345 



12 

CHAIRMAN BURTON: Senator Johnson? 

SENATOR JOHNSON: No questions. 

CHAIRMAN BURTON: Senator Romero? 

SENATOR ROMERO: Again, I would raise similar 
questions as I raised with the previous nominee, and that 
is — maybe we could start first of all with the state of 
labor /management relations. What is your view in terms of 
the current state of labor /management relations, how might 
these be improved, and what, in terms of bargaining, with 
any of the employee groups, what is your position in terms 
of having an exchange of basic due-process rights in order 
to set — maybe as a way to obtain a salary increase? If 
you can just explain a little bit about what your view is 
and something specific on what those contracts should look 
like? 

MR. TSAKOPOULOS: I would like to thank the 
Senator for the question. And I have not been actively 
involved in negotiations, however, I would say that I 
understand the concerns that the Senator has with the 
negotiating of due-process rights, which are very important 
rights. I think that the process needs to be injected with 
more trust, more communication between the parties, but also 
with a realistic perspective of where we are as a state 
entering an uncertain economic period with an energy crisis, 
and equally important concerns of the CSU system, which are 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 241). SACRAMENTO. CA 95827 / (916) 362-2345 



13 
keeping fees low, tuitions low, and providing the necessary 
economic resources to maintain operations of the plant 
required for the university system. 

SENATOR ROMERO: Let me just ask a second 
question. It appears that CSU does not have a redirection 
policy, and in those cases where a campus is declared 
impacted, the SAT is being used as a means of beginning to 
rank students . That ' s something that I think is the wrong 
way to go. Can you tell me as CSU, I would hope, begins to 
develop a redirection policy for those programs that are 
impacted, what criteria do you think should belong in that 
evaluation criteria to admit students for impacted programs 
say perhaps versus impacted campuses, and what is the role 
of the SAT and other standardized tests in that eligibility 
criteria? 

MR. TSAKOPOULOS: Thank you, Senator, for your 
question, it's an important one. 

Enrollment growth is a critical challenge to the 
CSU system at this time, and currently the CSU system is 
incorporating several different tools to deal with that 
problem. One of them that is being considered is the 
redirection program that you mentioned. 

In the attempt to satisfy as many students as 
possible, the CSU system has used impact — or is 
considering viewing each individual course individually as 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



14 
to how it is impacted. The use of SAT scores and looking at 
GPAs to rank students I see as possibly a way of admitting 
those students who are best suited to enroll at that present 
time in the CSU. 

Similar to the problems with the Cal Grant 
program, I believe that outreach programs to inform students 
of how to take advantage of the programs, how to prepare 
better for the SAT, and how to prepare better for admission 
to the CSU would be very helpful. 

SENATOR ROMERO: So you would favor keeping and 
using the SAT as part of that evaluation criteria, even 
though right now the CSU does not require the SAT for 
students with a GPA above 3.0? 

MR. TSAKOPOULOS: I would have to consider it 
further, Senator, but I think that if it proves to be an 
effective tool, then I would be in favor. However, again, I 
think it would be very important to evaluate the use of that 
and to make sure the use was proper, and I would be very 
happy to consult with the Senator in the future regarding 
this issue. 

SENATOR ROMERO: I would like that. And again, I 
clearly want to get to a redirection policy. I think that 
there's a real need for that and I think we must move 
expeditiously to do so. However, at a time that the UC is 
considering the validity of the SAT, when virtually every 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



15 
minority faculty association has pointed out the zero 
correlation between the students ' academic achievement and 
this SAT score, I would hope that we could, and I will 
engage with you and the other Trustees, and certainly the 
CSU on having this discussion about what is the role of the 
SAT, if any, as we go forward. I would look forward to 
having that discussion with you. 

MR. TSAKOPOULOS: Thank you, Senator. 

CHAIRMAN BURTON: Senator Knight? 

SENATOR KNIGHT: No questions. 

CHAIRMAN BURTON: Senator Karnette? 

SENATOR KARNETTE: No questions. 

CHAIRMAN BURTON: Senator Johnson? 

SENATOR JOHNSON: Well, I do feel constrained to 
weigh in on that last point. I mean, to argue that there's 
zero correlation just defies all logic. That correlation 
may not track precisely, but to say that there's zero. And 
so I'm pleased that you are expressing an open mind on the 
subject, neither supporting nor opposing and going in there 
with an open mind. 



MR. TSAKOPOULOS 
SENATOR JOHNSON 
CHAIRMAN BURTON 
SENATOR JOHNSON 
CHAIRMAN BURTON 



Thank you, Senator. 

Move the nomination. 

Do I get a — 

Go right ahead. 

But this is actually a question 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



16 
to Senator Romero. I'm not quite sure — a couple times you 
mentioned that a condition in the collective bargaining 
condition of a pay increase would be forfeiting due-process 
rights. What specifically are we talking about? 

SENATOR ROMERO: Well, I have been looking at it 
too and this is something that is occurring within the CSU 
that I feel has contributed to some of the malcontent with 
the state of labor relations. Basically, if there is a due- 
process right that contains in the statute as an opener for 
negotiating a contract — go below what ' s already in state 
law. I think that we shouldn't go that way. . It's basically 
like, again, the State of California, if we say that we 
have — 

CHAIRMAN BURTON: Do you have like, I mean, par 
exemplar? 

SENATOR ROMERO: I don't have anything specific 
right now. We can go ahead and give that to you. But 
basically — 

CHAIRMAN BURTON: Not here? 

SENATOR ROMERO: No. But if — 

CHAIRMAN BURTON: I mean if the statutes, you 
know, guarantee whatever due process thing is — 

SENATOR ROMERO: Right to a hearing, right to a 
grievance hearing. 

CHAIRMAN BURTON: I don't know if they can take 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



17 
that away by bargaining or not, but that's — do you have 
any? 

MR. REED: I don't think they can take that away 
if it's statutory, but if it's in a contract then it's 
negotiable and somebody might want to trade one benefit for 
another benefit, it can always be modified. 

CHAIRMAN BURTON: It's modifiable. 

You have family here I see? 

MR. TSAKOPOULOS: My mother, Elaine Tsakopoulos; 
my father, Angelo Tsakopoulos; my little sisters, Chrissa 
and Alexa, over there in the back; and Anthony, my nephew. 

CHAIRMAN BURTON: Witnesses in support. 
Witnesses in opposition. I'll move the nomination. Call 
the role. 

MS. WEBB: Senator Karnette? 

SENATOR KARNETTE: Aye. 

MS. WEBB: Karnette Aye. Senator Knight? 

SENATOR KNIGHT: Aye. 

MS. WEBB: Knight Aye. Senator Romero? 

SENATOR ROMERO: Aye. 

MS. WEBB: Romero Aye. Senator Johnson? 

SENATOR JOHNSON: Aye. 

MS. WEBB: Johnson Aye. Senator Burton? 

CHAIRMAN BURTON: Aye. 

MS. WEBB: Senator Burton Aye. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



18 
CHAIRMAN BURTON: Congratulations. 
MR. TSAKOPOULOS: Thank you. 

(Thereupon this portion of the 

Senate Rules Committee hearing 

was terminated at 

approximately 2:25 p.m.) 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 2-M). SACRAMENTO. CA 95S27 / (916) 362-2345 



19 
CERTIFICATE OF SHORTHAND REPORTER 

I, MICHAEL J. MAC IVER, a Shorthand Reporter, do 
hereby certify that I am a disinterested person herein; that 
I reported the foregoing Senate Rules Committee proceedings 
in shorthand writing; that I thereafter caused my shorthand 
writing to be transcribed into typewriting. 

I further certify that I am not of counsel or 
attorney for any of the parties to said Senate Rules 
Committee proceedings, or in any way interested in the 
outcome of said Senate Rules Committee proceedings . 

IN WITNESS WHEREOF, I have hereunto set my hand 
this 31st day of July 2001. 




Michael J. Mac Iver 
Shorthand Reporter 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 241). SACRAMENTO. CA 95827 / (916) 362-2345 



435-R 
Additional copies of this publication may be purchased for $3.00 per copy 
(includes shipping and handling) plus current California sales tax. 

Senate Publications 

1020 N Street, Room B-53 

Sacramento, CA 95814 

(916)327-2155 

Make checks payable to SENATE RULES COMMITTEE. 
Please include Stock Number 435-R when ordering. 






^HEARING 

SENATE RULES COMMITTEE 

STATE OF CALIFORNIA 




DOCUMENTS DEPT. 

SfcP - h 2001 

SAN FRANCISCO 
PUBLIC LIBRARY 



STATE CAPITOL 

ROOM 3191 

SACRAMENTO, CALIFORNIA 

MONDAY, JULY 16,2001 
1:30 P.M. 



436-R 



SENATE RULES COMMITTEE 
STATE OF CALIFORNIA 



HEARING 



STATE CAPITOL 

ROOM 3191 

SACRAMENTO, CALIFORNIA 



MONDAY, JULY 16, 2001 
1:30 P.M. 



REPORTED BY: 



JAMES F. PETERS, CSR, RPR 
CERTIFIED SHORTHAND REPORTER 
LICENSE NUMBER 10063 



PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 



APPEARANCES 
MEMBERS PRESENT 

SENATOR JOHN BURTON, Chair 

SENATOR ROSS JOHNSON, Vice Chair 

SENATOR BETTY KARNETTE 

SENATOR WILLIAM KNIGHT 

SENATOR GLORIA ROMERO 

STAFF PRESENT 

GREG SCHMIDT, Executive Officer 

PAT WEBB, Committee Secretary 

NETTIE SABELHAUS, Consultant on Governor's Appointments 

SUSIE SWATT, Consultant to Senator Johnson 

TIM SHELLEY, Consultant to Senator Karnette 

CHRIS BURNS, Consultant to Senator Knight 

RYAN SHERMAN, Consultant to Senator Romero 

ALSO PRESENT 

GENEVA BELL-SANFORD 

California Conference of Local AIDS Directors 

BARRY BROAD 
Teamsters 

DR. POKI NAMKUNG 

California Conference of Local Health Officers 

GERALD O'HARA, Member 

Occupational Safety and Health Appeals Board 



PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 



APPEARANCES CONTINUED 



ALSO PRESENT 



BRUCE POMER 

Health Officers Association 

TOM RANKIN 

California Labor Federation, AFL-CIO 

JUDITH REIGEL 

County Health Executives Association 

MARCY SAUNDERS, 

Occupational Safety and Health Appeals Board 

DAVID M. SOULELES, Chief Deputy Director 
Health Services Department 

TERRI THOMAS 

California Association of Public Hospitals and Health 

Systems 



PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 



INDEX 



Page 



Proceedings 



Governor's Appointees: 

DAVID M. SOULELES, Chief Deputy Director 

Health Services Department 1 

Statement in Support by Senator Ortiz 1 

Opening Statement by Mr. Souleles 3 

Questions by Senator Romero 

Could you address what you're doing 
concerning racial and ethnic disparities in 
terms of access to health? 4 

Questions by Senator Knight 

How do kids get lead poisoning? 6 

Do the kids have to eat the paint to get 

the poisoning? 6 

You mean lead-based paint exudes a fume that 
can provide lead poisoning? 7 

How much do they have to inhald to get 

lead poisoning? 7 

If the administration provides amnesty for 
three million illegal aliens, how will that 
affect California? 7 

Do you have a plan to increase your 
capabilities if that happens? 8 

Questions by Chairperson Burton 

What's the process by which the Department 
would use in determining whether or how to 
regulate Chromium 6 in drinking water? 9 



PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 



INDEX CONTINUED 






Page 


Witnesses in Support: 




GENEVA BELL-SANFORD 




California Conference of Local AIDS Directors 


10 


TERRI THOMAS 




California Association of Public 




Hospitals and Health Systems 


11 


DR. POKI MANKUNG 




California Conference of Local Health Officers 


11 


JUDITH REIGEL 




County Health Executives Association 


12 


BRUCE POMER 




Health Officers Association 


13 


Motion to Confirm 


13 


Committee Action 


13 


GERALD O'HARA, Member 




Occupational Safety and Health 




Appeals Board 


15 


Opening Statement by Mr. O'Hara 


15 


Questions by Senator Romero 




What is your thought with respect to fines? 


17 


Questions by Senator Karnette 




How will you clean up the backlog? 


19 


When they make decisions they look at 




past decisions? 


20 


Questions by Senator Knight 




You indicated deals were made with regard 




to fines, who were the deals between? 


20 



PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 



INDEX CONTINUED 



Witnesses in Support 



Page 



TOM RANKIN 

California Labor Federation, AFL-CIO 22 

MARCY SAUNDERS 

Occupational Safety and Health Appeals Board 22 

BARRY BROAD 

Teamsters 23 

Motion to Confirm 23 

Committee Action 23 

Termination of Proceedings 24 

Reporter's Certificate 25 



PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 



PROCEEDINGS 

CHAIRPERSON BURTON: Senator Ortiz. 

SENATOR ORTIZ: Okay. I'm happy to be first. 
Good afternoon, Mr. Chairman and members. It's my 
privilege today to introduce to you David Michael 
Souleles. He has an incredible background. 

Let me just first share with you in his period of 
time working in the Department in his temporary capacity 
as a Chief Deputy Director under the direction of the 
Director Health Services, I have found him not only to be 
very well informed and responsive and quite, I think, 
responsive to the concerns of many of my colleagues as we 
work through the Health Committee files and issues, but 
believe him to be probably one of the strongest candidates 
we've seen before this Committee given the breadth of his 
experience, particularly in the areas I think that the 
State needs to address today. 

He has an impressive background. He was a 
Director of the AIDS program at UC Irvine. He was a 
program manager of student health services back in ' 91 at 
UC Irvine. In '94 he was the AIDS program manager for the 
Bureau of Preventive Health, which addressed issues of 
education and outreach as well as promotion. In '95, he 
served as the manager of the Bureau of Preventive Health, 
overseeing programs, such as epidemiology, vital records, 

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 



many of the important public health issues that we are 
dealing with as Californians in making policy. 

In 1999, he was appointed Special Assistant to 
the Director of the Department of Health Services and has 
served through today. And his major areas of 
responsibility include the management of traditional 
public health programs, the management of Medi-Cal 
programs, the development of budget programs and policies, 
coordinating efforts with a multitude of State and local 
offices and constituents. He's presently Chief Deputy 
Director under the administrative direction of the 
Director of Health Services. He's dealing with preventive 
services, primary and family health, health information 
and strategic planning, information and technology 
services, multi-cultural health, women's health, public 
affairs . 

And in closing, let me just say, he has been 
probably one of the most experienced candidates and recent 
appointees to the Administration in the area of local 
public health, which I feel very strongly about, and we're 
finding it's affecting all districts throughout California 
as we try to address and tackle building in information 
systems and tracking communicable diseases . 

He has a very strong relationship with the local 
health officers throughout California, which has proven to 

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 



be invaluable as we seek direction and assistance. I am 
proud to be here supporting his confirmation as Chief 
Director with the Department of Health Services and I 
respectfully request confirmation of him today. 

CHAIRPERSON BURTON: Go ahead, Sir. 

MR. SOULELES: Mr. Chairman and Members of the 
Rules Committee, my name is David Souleles. Thank you for 
the ability to speak with you this afternoon. 

I'm excited about the opportunity afforded me by 
Governor Gray Davis to serve as Chief Deputy Director for 
the California Department of Health Services. The 
Department is one of the largest and most complex health 
and public health care organizations in the country with 
an annual budget of nearly $28 billion. 

The administrative demands alone of managing the 
Department are significant. Additionally, on a daily 
basis, the Department must ensure the safety of 
California's food and water, respond to natural disasters 
and the threat of bio- terrorism, deliver preventive health 
programs and services, protect the public from 
communicable diseases and provide health care coverage for 
more than five million Calif ornians . 

I come to this position with 14 years experience 
in public health as a health educator and public health 
program manager. I've had the benefit of being educated 

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 



by one of the finest public universities in the country, 
the University of California, where I received my Bachelor 
of Arts degree at Irvine and my Master of Public Health 
Degree at Los Angeles. 

I have submitted to you my resume and goals 
statement for this position and I've had an opportunity to 
meet with most of you or members of your staffs to discuss 
issues of particular importance and concern. 

I will be happy to answer any questions you may 
have and look forward to your favorable consideration. 

Thank you . 

CHAIRPERSON BURTON: Senator Romero. 

SENATOR ROMERO: Thank you. Can you just talk a 
little bit about some of the long-standing concerns about 
racial and ethnic disparities in terms of access to health 
care and what you would propose to do or what you are 
doing to address this critical issue? 

MR. SOULELES: Yes, Senator, certainly. Racial 
and ethnic health disparities are a significant concern to 
us in the State of California, when you look at a variety 
of different public health indicators, whether it's infant 
mortality or issues of asthma or diabetes. We often see 
very, very shocking differences between what you would see 
for white populations and what you would see say for 
African-American or Latino populations. 

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 



The Department does a variety of things along the 
lines of trying to respond to these issues. In all of our 
different program areas really targeting and focusing our 
efforts on specific populations where there are the 
greatest levels of risk is important to us. As an 
example, in our HIV programs, we would do targeting of 
populations at high risk, African-American populations, 
right now, women of color in particular. So program 
services funding are targeted to those populations. 

Additionally, on a more global level, the Health 
and Human Services agency right now under Secretary 
Grantland Johnson has convened a task force of all of the 
agencies within Health and Human Services. Director Diona 
Bonta for the Department of Health Services and Director 
David Carlisle from OSHPD have been asked to co-chair that 
effort to really look at what we can do as an agency to 
reach the healthy people 2010 target of eliminating racial 
and ethnic health disparities in the United States and 
hence in California. 

The State of California was selected as one of 
five states that will be working in partnership with the 
American Public Health Association and the Surgeon 
General's Office to convene a task force of folks 
concerned about this issue statewide. And, in fact, the 
first meeting of that group is later this week in San 



PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 



Francisco. And we as a Department will be participating 
very actively in that effort. 

SENATOR ROMERO: Thank you. 

CHAIRPERSON BURTON: Senator Johnson. 

SENATOR JOHNSON: No questions. 

CHAIRPERSON BURTON: Senator Knight? 

COMMITTEE MEMBER KNIGHT: Yes, thank you, Mr. 
Chairman . 

CHAIRPERSON BURTON: You're welcome. 

COMMITTEE MEMBER KNIGHT: It's been indicated 
that you didn't know how many children we had were 
suffering from lead poisoning and indicated that there may 
be some 38,000 kids in the State, of which only 3,700 of 
them are being treated. I want to know, you know, how do 
kids get lead poisoning? 

MR. SOULELES: There are a number of different 
issues. One of the biggest problems and risks for lead 
poisoning for children is children that live in housing 
that's older housing that was painted when lead was still 
in paint. And you find this really in housing stock even 
before 1978. 

COMMITTEE MEMBER KNIGHT: Question right there. 
Do the kids have to eat the paint to get the poisoning? 

MR. SOULELES: They can eat the paint. It can 
also come from inhalation. If there's been remodeling 

PETERS .SHORTHAND REPORTING CORPORATION (916) 362-2345 



remediation work that's going on -- 

COMMITTEE MEMBER KNIGHT: You mean lead-based 
paint exudes a fume that can provide lead poisoning? 

MR. SOULELES: It's the particles that are in the 
dust, for example, when sanding might take place or that's 
in the chips of paint that may fall to the ground. And so 
children playing in neighborhoods and households where 
there is lead paint that's been present, they may eat it, 
they may get it on their hands and touch their mouths, 
they may inhale it if remodeling work is going on. These 
are all ways they can get it. 

COMMITTEE MEMBER KNIGHT: How much do they have 
to inhale to get lead poisoning. 

MR. SOULELES: I could not tell you the exact 
amount of how much of an exposure would be necessary to 
cause lead poisoning. That's something I certainly can 
have our program staff get some information to your office 
though in terms of the specific dosage amounts. 

COMMITTEE MEMBER KNIGHT: Secondly, the 
Administration is contemplating amnesty for some three 
million illegal aliens. If that happens, what's that 
going to do to the State of California? 

CHAIRPERSON BURTON: The Federal Administration? 

COMMITTEE MEMBER KNIGHT: Yes. 

CHAIRPERSON BURTON: The Bush Administration? 

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 



COMMITTEE MEMBER KNIGHT: Yeah. 

SENATOR JOHNSON: It ain't Gore. 

( Laughter . ) 

COMMITTEE MEMBER KNIGHT: Pardon? 

CHAIRPERSON BURTON: Just asking. 

( Laughter . ) 

MR. SOULELES: In terms of issues of health and 
public health, I mean, I think we're always concerned 
about populations that we are responsible for core public 
health. And I think alluding to what Senator Romero asked 
earlier to the extent that we see disparities in health 
status based on ethnicity and race, we'll have to continue 
to focus our programs and target our programs on the 
populations where we see the greatest risk. 

When the Cambodian resettlement occurred in Long 
Beach in the late seventies and eighties and the Long 
Beach Health Department among other agencies within the 
City was responsible for responding to the influx of 
immigrants into the City, really having to target programs 
to deal with language issues, to deal with access issues 
in order to ensure core public health functions and core 
public health is assured for the people. 

COMMITTEE MEMBER KNIGHT: So do you have a plan 
to increase your capabilities if, in fact, this happens? 

MR. SOULELES: I think we're always looking to 



PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 



the horizon with whether it's populations coming in as a 
result of amnesty or a result of immigration, yes, that we 
would work towards that. 

CHAIRPERSON BURTON: Senator Karnette . 

SENATOR KARNETTE: No questions. 

CHAIRPERSON BURTON: What's the process by which 
the Department would use in determining whether or how to 
regulate Chromium 6 in drinking water? 

MR. SOULELES : Chromium 6 in drinking water is an 
issue we've been spending quite a bit of time on. We have 
requested through our Director from the Office of 
Environmental Health Hazard Assessment that they provide 
us with a public health goal for Chromium 6 in the water, 
which would be sort of the ideal if you didn't have to 
factor in cost, if you didn't have to factor in 
technology, what would the level be. OEHHA should be 
developing that goal shortly. 

In addition, OEHHA has requested the University 
of California to convene an expert panel to assess the 
carcinogenicity of Chromium 6 in water. We do know that 
Chromium 6 is carcinogenic when inhaled, but the science 
is much less clear on water. And so this scientific 
review panel hopefully will provide us recommendations 
later in August. 

Once we have the public health goal from OEHHA 

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 



10 

and the information from the expert advisory panel, our 
Department will set forth on developing a drinking water 
standard, called a maximum contaminant level. We expect 
that process to be complete by January, 2004. 

CHAIRPERSON BURTON: Witnesses in support? 

Briefly . 

MS. BELL-SANFORED: To this distinguished board 
and to the Chair, Senator John Burton, my name is Geneva 
Bel 1-Sanf ord . I'm the AIDS program coordinator for San 
Joaquin County Public Health Services. 

I'm here representing the California Conference 
of Local AIDS Directors, CCLAD . CCLAD is a statewide 
organization representing 61 health jurisdictions. And as 
well as an affiliate of the California Conference of Local 
Health Officers, our mission is to address people living 
with HIV. 

As such, the Conference of Local Aids Directors 
would like to take this opportunity to support the 
confirmation of David Souleles as Chief Deputy Director 
for the California Department of Health Services. 

Prior to his current appointment, Mr. Souleles 
was the AIDS director for the City of Long Beach. And in 
that position he was a member of CCLAD, as well as a past 
president of CCLAD. His commitment to public service is 
note worthy, as well as his well-respected representation 

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 



11 

on public health issues in the State of California. 

Again, we the California Conference of Local Aids 
Directors would like to support the confirmation of Mr. 
David Souleles . 

CHAIRPERSON BURTON: Thank you. 

MS. THOMAS: Terri Thomas on behalf of the 
California Association of Public Hospitals and Health 
Systems. I'd simply say that Mr. Souleles is extremely 
knowledgeable, very accessible and smart. In our view, 
who could ask for anything more. We urge your 
conformation . 

Thank you . 

DR. NAMKUNG: Thank you for this opportunity to 
speak on behalf of the California Conference of Local 
Health Officers in support of David Souleles' nomination. 
I'm Dr. Poki Namkung. I'm the Health Officer of the City 
of Berkeley and president-elect of the California 
Conference of Local Health Officers. 

I'm going to be brief. David Souleles is a rare 
individual. It is unusual to find someone who can so 
quickly grasp the complexity of a problem or a situation. 
And public health problems are often complex. They 
involve epidemics, outbreaks, securing the health of 
children and families, coordinating federal, State and 
local health systems, gaining public and political support 

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 



12 

and doing all of this usually with not enough money. 

So observing Mr. Souleles being confronted with a 
problem, one can see his mind moving almost immediately to 
solutions and how to accomplish them. He is a superb 
administrator, whether it be managing resources, building 
consensus or motivating staff. 

The conference has enjoyed an excellent working 
relationship with Mr. Souleles, because of his work as 
assistant to the Director, Dr. Diona Bonta, and the 
communications has vastly improved. The partnership 
between local public health and the State Department of 
Health Services has never been better, and this is crucial 
because it is that partnership that protects and promotes 
the health of the people of California. 

It is the Conference's opinion that the State of 
California would be hard pressed to find a better 
candidate than Mr. Souleles and we wholeheartedly support 
his nomination. 

Thank you . 

CHAIRPERSON BURTON: Thank you. Yes, ma'am. 

MS. REIGEL: Judith Reigel with the County Health 
Executives Association of California. We represent the 
directors of the county and city health departments. And 
I'd just like to echo Dr. Namkung's words. The current 
Department of Health Services has gone a long way in 

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 



13 

improving the critical working relationship between the 
State and local health departments. David Souleles in his 
role at the State has had a big role in that and his very 
strong background. And local health, public health 
programs he's helped immensely. We strongly support his 
confirmation . 

MR. POMER: Mr. Chairman, Bruce Pomer with the 
Health Officers Association of California. In my 30 years 
of experience working with the Department of Health 
Services and Directors, this David Souleles appointment 
represents one of the finest appointments along with the 
other staff under Dr. Diona Bonta in terms of being up to 
speed immediately on public health issues and 
understanding what we at the local level go through in 
trying to implement programs . 

Therefore, we wholeheartedly support this 
appointment . 

Thank you . 

CHAIRPERSON BURTON: Witnesses in opposition? 

Hearing none, moved by Senator Karnette. 

Secretary call the role. 

COMMITTEE SECRETARY WEBB: Senator Karnette? 

SENATOR KARNETTE: Aye. 

COMMITTEE SECRETARY WEBB: Karnette aye. 

Senator Knight? 

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 



14 

SENATOR KNIGHT: Aye. 

COMMITTEE SECRETARY WEBB: Knight aye. 

Senator Romero? 

SENATOR ROMERO: Aye. 

COMMITTEE SECRETARY WEBB: Romero aye. 

Senator Johnson? 

SENATOR JOHNSON: Aye. 

COMMITTEE SECRETARY WEBB: Johnson aye. 

Senator Burton? 

CHAIRPERSON BURTON: Aye. 

COMMITTEE SECRETARY WEBB: Burton aye. 

CHAIRPERSON BURTON: Actually, the confirmation 
will not be official till you get the Bill Lloyd 
handshake . 

( Laughter . ) 

CHAIRPERSON BURTON: And he's not here, so you're 
kind of held in abeyance till we can get him to show up. 
Maybe, he'll just -- 

SENATOR JOHNSON: Put the matter on call, Mr. 
Chairman . 

( Laughter . ) 

CHAIRPERSON BURTON: Drop by his office and give 
him a high five. 

Congratulations . 

MR. SOULELES: Thank you, sir. 

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 






15 

(Applause . ) 

COMMITTEE MEMBER KNIGHT: Isn't there anybody 
here ? 

CHAIRPERSON BURTON: Nobody can take Bill Lloyd's 
place . 

I'm sorry, did you have family here? That will 
take the place of Bill Lloyd. 

MR. SOULELES: I'd like to actually, first, 
acknowledge California Health Department Director, Diona 
Bonta who is here and who's been a great support and 
encouragement for me. And then also my family, my partner 
Rubin Carillo who is here, my parents Victor and Bonnie 
Souleles who are here, my brother and sister-in-law Dean 
and Sandy Souleles, and my nephew John, who's, I think, 
wondering how he ended up in a Senate hearing on his 
vacation . 

Thank you very much. 

(Laughter . ) 

(Applause . ) 

CHAIRPERSON BURTON: Senator, is it all right if 
we get Gerry O'Hara out of the way? 

Gerry . 

MR. O'HARA: Is this on? 

CHAIRPERSON BURTON: Yeah. 

MR. O'HARA: Mr. Chairman and members, Gerald 

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 



16 

O'Hara. I'm the Governor's appointee to the CalOSHA 
Appeals Board. I've had a bit of background and 
experience in the area. 

In 1973 when then Governor Reagan was looking at 
the CalOSHA thing, we were included in it, and I was 
appointed to the OSHA Standards Board, the law making body- 
part of CalOSHA at that time, and reappointed by Governor 
Reagan before he left office. 

Governor Jerry Brown twice appointed me to the 
Board. I served a total of 16 years on the OSHA Standards 
Board. Governor Deukmejian didn't appoint lobbyists, so 
he didn't appoint me at all, and that ended my service in 
1990. 

I've served on many -- the Governor's task force 
on workers' compensation, which is directly related to 
occupational safety and health, of course. And I served 
for seven years on the Commission on Health and Safety and 
Workers' Compensation, appointed by two different speakers 
of the Assembly. 

The OSHA Appeals Board handles appeals of 
citations of on-the-job violations, and it is a growing 
number. The Legislature has increased the fines. And as 
a result, we have some like half of the citations are now 
appealed . 

I don't know what else I could say. Many of you 

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 



17 

know me from the many years I served around here as a 
lobbyist for the Teamsters Union. I retired from that 
March 13th, and the Governor appointed me to this position 
on March 15th of this year. 

If you have any questions, I'm very willing to 
try to answer them. 

CHAIRPERSON BURTON: Senator Johnson? 

SENATOR JOHNSON: No questions. 

CHAIRPERSON BURTON: Senator Romero. 

SENATOR ROMERO: Yes. Thanks. It's good to see 
you. Let me just ask, though, a recent study by the 
Division of Occupational Safety and Health found that we 
issue fines against employers, but frequently they're 
reduced on appeal by totally or a significant amount. 
What is your thought with respect to fines, imposition of 
fines and actually imposing those fines on employers who 
have been found to have committed violations? 

MR. O'HARA: I'm glad you brought that up, 
Senator. The Appeals Board is generally giving credit for 
those reductions. They, in fact, are not the body that is 
reducing the fines. We have a situation like you might 
see in a crime show where the district attorney comes to 
the Judge and has a deal, and that is what's happening, 
and that's the long and the short of it. 

And I believe that there really is going to have 

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 



18 

to be some time spent on this, so that there is a reality, 
2 so that this effect that we are trying to have there is a 
good reason why we have worker health and safety on the 
job. These workers have given up the right to sue. They 
have a right to a safe workplace, and we have to insist 
6 that this be followed through on. And, of course, those 
same players if they follow through on it, they're going 
to save themselves a whole bunch of money on workers' 
9 compensation premiums. So all this is all connected. 

10 And I agree with you that people should not be 

11 getting off without paying fines that are bearable at 

12 least. And in many cases no case is made whatsoever about 

13 how bearable the fine is. In many cases, they just merely 

14 say that it would be difficult for us to pay this fine. 

15 And, frankly, you know, fines are supposed to hurt people. 

16 We're trying to get people to tow the line. 

17 And while I don't want to sound like a hanging 

18 judge, the truth is that all these issues have to be 

19 considered, and they're on my plate for sure. 

20 SENATOR ROMERO: Thank you. 

21 COMMITTEE MEMBER KNIGHT: Question. 

22 CHAIRPERSON BURTON: Senator Karnette. 

23 SENATOR KARNETTE: Well, I think it's Senator 

24 Knight's -- 

SENATOR KNIGHT: Excuse me. 

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 



19 



( Laughter . ) 

CHAIRPERSON BURTON: Senator Karnette, I've 
still got the gavel. 

SENATOR KARNETTE: Oh, I'm sorry. I thought you 
thought I was Senator Knight. 

(Laughter . ) 

SENATOR KARNETTE: I noticed one of your goals 
was to -- you want to look at the backlog of requests for 
reconsideration, and you want to clean up this as a 
long-term goal. How do you see us doing that or you're 
doing it? 

MR. O'HARA: Well, we've had some staff 
dislocation there in the past. And as a result, the 
people who are supposed to be on the job doing that 
particular area just, you know, weren't able to or there 
wasn't enough people on the job. 

Right now, I think we probably are staffed well 
enough and we have another lawyer coming aboard soon, so 
that we will be able to catch up with that, but we have a 
significant number of requests for reconsideration that 
have been hanging for four sometimes five years. 

And that it isn't a way to do things, because in 
the meantime those unsafe working conditions are not 
abated while the employer does this request for 
reconsideration. And if we don't promptly act on the 

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 



20 

request for reconsideration, we're not doing our job to 
2 provide the safe workplace. 

SENATOR KARNETTE: Also, isn't it true that you 
have to -- that when they look at various decisions, they 
have to go back into the past, that could be simplified do 
6 you think? 

MR. ' HARA : Yeah, we do have everyone of our 
decisions are relied one on the other over 27 years. And 
9 we're really going to have to go through them and review 

10 them and find out what precedent cases should be precedent 

11 cases and march forth from there. 

11 It just doesn't make sense that we have this huge 

13 body of precedent decisions. But when you start off in 

14 something like that, I guess it may seem like the right 

15 idea and then all of a sudden, you get to the point where 

16 you're blocked here, there and everywhere. 

17 CHAIRPERSON BURTON: Senator Knight, I believe 

18 you had a question. 

19 COMMITTEE MEMBER KNIGHT: Thank you, Mr. 

20 Chairman. I didn't understand your answer when you were 

21 talking about the fines being reduced and you indicated 

22 that there were deals being made, and I wondered who the 

23 deals were between? 

24 MR. O'HARA: Well, this is the people with the 

25 Division of Occupational Safety and Health who do the 

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 



21 

citations and they do the enforcement, and they come to 
the hearing before the OSHA Appeals Board. And they are 
the enforcement people of the CalOSHA program. 

COMMITTEE MEMBER KNIGHT: So who are the deals 
being made between? 

MR. O'HARA: Well, it would be the employer and 
the enforcing agencies whoever is handling the case? 

COMMITTEE MEMBER KNIGHT: CalOSHA? 

MR. O'HARA: Whoever is handling the case for the 
Division of Occupational Safety and Health that day. 

COMMITTEE MEMBER KNIGHT: Then they make a deal 
and come to the Board and present that deal to the Board? 

MR. O'HARA: That's right. 

COMMITTEE MEMBER KNIGHT: And the Board approves 
it? 

MR. O'HARA: The Board has no choice, if they're 
not going to prosecute the case, that's where they're 
going to stand, you know. 

COMMITTEE MEMBER KNIGHT: Then I guess if the 
enforcing agency decides that it's reasonable to reduce 
the fine, then is that a part of the process? 

MR. O'HARA: That's part of the process. 

SENATOR KNIGHT: Okay. 

CHAIRPERSON BURTON: Witnesses in support 
briefly . 

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 



22 

1 MR. RANKIN: Tom Rankin, California Labor 

2 Federation. I've served with Gerry on the Occupational 
Safety and Health and Workers' Comp Board. And he's shown 

4 a tremendous ability to protect the interests of workers 
who get injured on the job. He'll bring that to this job. 

6 He'll bring his years on the Standards Board. He 

understands the regulations that he's now adjudicating 
over. And I think he will help Marcy Saunders bring this 

9 OSHA Appeals Board back to where it should be. 

10 Thank you. 

11 CHAIRPERSON BURTON: Marcy. 

12 MS. SAUNDERS: Senator Burton and Members of the 

13 Rules Committee, my name is Marcy Saunders and I'm the 

14 Acting Chair for the CalOSHA Appeals Board. I'm here to 

15 speak on behalf of Mr. O'Hara. I find him to be an 

16 absolute wealth of knowledge, to be an extremely ethical 

17 man and to be very, very objective. 

18 And in the months that I have worked with him so 

19 far, I really don't know what I would have done without 

20 him. He is very correct when he says that we are four to 

21 five years in backlogs and have thousands and thousands of 

22 appeals that come before us every year. And I have found 

23 him to be extremely objective, which I think is very 

24 important in our position, and also to ask some very 

25 intriguing questions that make us realize we do have to go 

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 



23 

back, we do have to look at these other decisions and 
decide which are going to be precedential. I think he's 
wonderful for the Board. 

Thank you . 

MR. BROAD: Mr. Chairman and Members, Barry Broad 
on behalf of the Teamsters. Gerry hired me. He and I 
spoke and worked together for 15 years every day. I 
really know this gentleman. He's a person of 
extraordinary integrity and decency and common sense. I 
can't think of anybody who'd be better in this kind of a 
position. I urge an aye vote. 

Thank you . 

CHAIRPERSON BURTON: Witnesses in opposition? 

Move the nomination. 

COMMITTEE SECRETARY WEBB: Senator Karnette? 

SENATOR KARNETTE: Aye. 

COMMITTEE SECRETARY WEBB: Karnette aye. 

Senator Knight? 

COMMITTEE MEMBER KNIGHT: Aye. 

COMMITTEE SECRETARY WEBB: Knight aye. 

Senator Romero? 

SENATOR ROMERO: Aye. 

COMMITTEE SECRETARY WEBB: Romero aye. 

Senator Johnson? 

SENATOR JOHNSON: Aye. 

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 









24 


1 


COMMITTEE SECRETARY 


WEBB: Johnson aye. 




2 


Senator Burton? 






3 


CHAIRPERSON BURTON: 


Aye . 




A 


COMMITTEE SECRETARY 


WEBB: Burton aye. 




5 


CHAIRPERSON BURTON: 


Congratulations, Gerry. 




6 


(Applause . ) 






7 








8 


• 






9 








10 








11 








12 








13 








14 








15 








16 








17 








18 








19 








20 








21 








22 








23 








24 








25 









PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 



25 



CERTIFICATE OF REPORTER 

I, JAMES F. PETERS, a Certified Shorthand 
Reporter of the State of California, and Registered 
Professional Reporter, do hereby certify: 

That I am a disinterested person herein; that the 
foregoing Senate Rules Committee meeting was reported in 
shorthand by me, James F. Peters, a Certified Shorthand 
Reporter of the State of California, and thereafter 
transcribed into typewriting. 

I further certify that I am not of counsel or 
attorney for any of the parties to said meeting nor in any 
way interested in the outcome of said meeting. 

IN WITNESS WHEREOF, I have hereunto set my hand 
this 2nd day of August, 2001. 




3. (ik^ 



JAMES F. PETERS, CSR, RPR 
Certified Shorthand Reporter 
License No. 10063 



PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 



436-R 
Additional copies of this publication may be purchased for $3.00 per copy 
(includes shipping and handling) plus current California sales tax. 

Senate Publications 

1020 N Street, Room B-53 

Sacramento, CA 95814 

(916)327-2155 

Make checks payable to SENATE RULES COMMITTEE. 
Please include Stock Number 436-R when ordering. 



| HEARING 

i SENATE RULES COMMITTEE 

STATE OF CALIFORNIA 




DOCUMENTS DEPT. 

OCT 2 9 2001 

SAN FRANCISCO 
PUBLIC LIBRARY 



STATE CAPITOL 

ROOM 3191 

SACRAMENTO, CALIFORNIA 

MONDAY, AUGUST 20, 2001 
2:45 P.M. 



437-R 



SENATE RULES COMMITTEE 
STATE OF CALIFORNIA 



HEARING 



STATE CAPITOL 
SACRAMENTO, CALIFORNIA 



MONDAY, AUGUST 20, 2 001 
2:45 P.M. 



COPY 



Reported by: 

Michael Mac Iver, Shorthand Reporter 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA l .>5827 / (916) 562-2345 



11 



APPEARANCES 
MEMBERS PRESENT 
SENATOR JOHN BURTON, Chair 
SENATOR ROSS JOHNSON, Vice Chair 
SENATOR BETTY KARNETTE 
SENATOR WILLIAM KNIGHT 
SENATOR GLORIA ROMERO 

STAFF PRESENT 
GREG SCHMIDT, Executive Officer 
PAT WEBB, Committee Secretary 

NETTIE SABELHAUS, Consultant on Governor's Appointments 
SUSIE SWATT, Consultant to SENATOR JOHNSON 
TIM SHELLEY, Consultant to SENATOR KARNETTE 
CHRIS BURNS, Consultant to SENATOR KNIGHT 
RYAN SHERMAN, Consultant to SENATOR ROMERO 

ALSO PRESENT 
ROY MABERLY, Assoc, of Black Correctional Workers 
JIM AMOS, California Correctional Women's Facility 
CARLISLE MITCHELL 
CHAUNCET THOMAS 
RICHARD DREGAN 

STEPHEN KENT, California Correctional Supervisors 
FRANK SANDERS, Association of Correctional Workers 
CHARLES PETERSON, Central California Women's Facility 
BARBARA YOUNG, Chowchilla Women's Prison 



PETERS SHORTHAND REPORTING CORPORATION 

5336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



Ill 
ALSO PRESENT, cont. 
CHARLES BABILLA, Prison Industries 
MANNY RIVERA, Phoenix House Foundation 
TED HUNT, Los Angeles Police Protective League 
TIM YARYAN, Assoc. Los Angeles County Deputy Sheriffs 
JOHN CURRIER, Rincon San Luiseno Band of Mission Indians 
BARRY BROKAW, Agua Caliente Band of Puela Indians 
ROD BLONIEN, California Commerce Club 
JOHN LATIMER, Picayune Rancheria 
MARK MACCARO, Pechanga Band of Luisano Mission Indian 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (9161 362-234-5 



INDEX 

Page 
Proceedings 1 

Governor's Appointees: 

GWENDOLYN MITCHELL, Warden 

Central California Women ' s Facility 1 

Background and Experience 1 

Questions by SENATOR JOHNSON re: 

Filing of Statement of Economic Interest 2 

Questions by SENATOR ROMERO re: 

What Has CCWF Done to Assist Women 

Inmates to Keep in Contact with 

Their Children 4 

Questions by SENATOR KARNETTE re: 

What is CCWF Doing to Ensure Custody 

and Health Care Work Together 5 

Questions by CHAIRMAN BURTON re: 

Vocational Training Programs for 

Inmates and Availability of Programs 7 

Budgets For Inmate Vocational Training 8 

Drug Usage and Discipline at CCWF 9 

Witnesses : 

ROY MABERLY 

State President 

Association of Black Correctional Workers 11 

JIM AMOS 

Supervisor of Academics 

California Correctional Women's Facility 11 

CARLISLE MITCHELL 

Son of Gwendolyn Mitchell 12 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA l >5827 ' (916) 362-2345 



Witnesses, cont . 

CHAUNCET THOMAS 

Daughter of Gwendolyn Mitchell 12 

RICHARD DREGAN 

Father of Gwendolyn Mitchell 13 

STEPHEN KENT 

Chapter President 

California Correctional Supervisors Organization. . 14 

FRANK SANDERS 

Chairperson 

San Joaquin Valley Chapter 

Association of Correctional Workers 15 

CHARLES PETERSON 

Teacher, CSEA Steward 

Central California Women ' s Facility 15 

BARBARA YOUNG 

Local CSEA President 

Chowchilla Women's Prison 16 

CHARLES BABILLA 

Manager 

Prison Industries 16 

MANNY RIVERA 

Director 

Phoer. ix House Foundation 16 

Motion to Confirm 17 

Committee Action 17 



JOHN E. HENSLEY, Member 

California Gambling Control 

Commission 18 

Background and Experience 18 

Questions by CHAIRPERSON BURTON re: 

Maximum Number of Gaming Machines 

Allowed by Tribal Compacts 19 

How Many Slot Licenses Have 3een Issued 19 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 340. SACRAMENTO. CA 95827 / (9161 362-2345 



VI 



Questions by CHAIRPERSON BURTON, cont. 

Revenue Sharing Distribution 2 

CPA Firm and License Information 21 

Revenue Sharing Distribution 22 

Questions by SENATOR JOHNSON re: 

Filing of Statement of Economic Interest 23 

Questions by SENATOR ROMERO re: 

What Steps Have Been Taken Toward 

Hiring an Executive Director 2 4 

Questions by SENATOR KNIGHT re: 

National Indian Gaming Control Minimum 
Internal Control Standards 25 

Has Staff Implemented Those Kind of 

Standards 26 

How Many Tribes Have Minimum Control 

Standards in Place 27 

Questions by SENATOR KARNETTE re: 

Will All Regulations Be Applied To Each 

Tribe Unilaterally 27 

Questions by CHAIRPERSON BURTON re: 

Payments to Nongaming Tribes 28 

Payment Cap to Nongaming Tribes 29 

How Many Tribes Are Nongaming 30 

What is Purpose of Revenue Sharing 30 

Witnesses : 

TED HUNT 

Los Angeles Police Protective League 32 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 45827 (916) 362-2345 



Vll 



Witnesses, cont. 

TIM YARYAN 

Association for Los Angeles County 

Deputy Sheriffs 32 

ALAN LAWS ON 

Chairman 

San Pasqual Band of Mission Indians 32 

JOHN CURRIER 

Chairman 

Rincon San Luiseno Band of Mission Indians 33 

BARRY BROKAW 

Agua Caliente Band of Puela Indians 35 

ROD BLONIEN 

California Commerce Club 36 

Questions by CHAIRPERSON BURTON re: 

What ' s the Jurisdiction Over 

Card Clubs 37 

Witnesses continued: 

JOHN LATIMER 

Picayune Rancheria 3 8 

Witness in Opposition: 

MARK MACCARO 

Chairman 

Pechanga Band of Luisano Mission Indians 39 

Question by CHAIRMAN BURTON re: 

Public Hearing Process 41 

Statutory Obligation for 

Public Hearings 42 

Witness, cont. 

MARK MACCARO 43 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95S27 / (yi6) 362-2345 



VI 11 

Question by CHAIRMAN BURTON re: 

May 15th Cut Off Date 45 

Questions by CHAIRMAN BURTON cont . 

Determining the Number of Gaming 

Machines 46 

May 15th Cut Off Date 49 

Tribes Profits from Casinos 52 

License Fees for Slot Machines 53 

Questions by SENATOR KARNETTE re: 

Dispute Resolution and Money Distribution. ... 56 

Statement by SENATOR KARNETTE 5 7 

Statement by SENATOR JOHNSON 60 

Statement by CHAIRMAN BURTON 62 

Questions by CHAIRMAN BURTON re: 

Meet-and-Conf er process 65 

Witness : 

JOHN CURRIO , continued 6 6 

Question by CHAIRMAN BURTON re: 

Licensing Fee on Slot Machines 6 9 

Motion to Confirm 7 

Committee Action 7 

MICHAEL PALMER, Member 

California Gambling Control Commission 71 

J. K. SASAKI, Member 

California Gambling Control Commission 71 

ARLO SMITH, Member 

California Gambling Control Commission 71 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



IX 

Questions by SENATOR JOHNSON re: 

Filing of Statement of Economic Interest 71 

Motion tc Confirm 79 

Committee Action 79 

Termination of Proceedings 80 

Certificate of Reporter 81 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



PROCEEDINGS 

CHAIRMAN BURTON: Governor's appointees. 
Gwendolyn Mitchell, Warden, Central California Women's 
Facility. 

Good afternoon. 

MS. MITCHELL: Good afternoon. 

CHAIRMAN BURTON: We have your statement and 
goals, for the record, so if you want to just briefly 
comment on some of the issues that you hope to achieve. 

MS. MITCHELL: Okay. 

CHAIRMAN BURTON: Go ahead, ma'am. 

MS. MITCHELL: Thank you. 

I'm currently serving as the Warden at Central 
California Women's Facility, and I was officially appointed 
in November of — November 29th, 2000. I began my career as 
a correctional officer and had served in several 
supervisory/management capacities. I'm a member of numerous 
community service and professional organizations, including 
the local chamber of commerce and Rotary club. I live in 
Chowchilla and am an active member of the local community. 
I'm enjoying the challenge of my current assignment as the 
Warden of CCWF. 

Thank you, and at this time I will address any 
questions that you might have in regards to the operation of 
the facility. 



PETERS SHORTHAND REPORTING CORPORATION 

333ft BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 . (916) 362-2345 



2 

CHAIRMAN BURTON: Senator Johnson. 

2 SENATOR JOHNSON: Thank you, Mr. Chairman. 

3 I have, as the members of the Committee know, a 

4 strong predisposition to support those individuals nominated 
by the Governor of whatever political party. I believe that 

6 Governors ought to have the ability to put together a team 

7 that they're happy with. 

8 Everything that I've heard about you personally 

9 has been positive. But there have been some somewhat 

10 embarrassing revelations concerning some people hired by the 

11 present administration, some people appointed or reappointed 

12 by the present administration. So I'm not picking on you. 

13 I intend to in the future or at least for the foreseeable 

14 future to ask every nominee that comes before us a couple of 

15 questions. 

16 CHAIRMAN BURTON: On which energy stock you have. 

17 SENATOR JOHNSON: Well, it kind of relates to 

18 that, Mr. Chairman. Not to put too fine a point on it, are 

19 you required in this position to file a Statement of 

20 Economic Interest? 

21 MS. MITCHELL: Yes, I am. 

22 SENATOR JOHNSON: And have you done so? 

23 MS. MITCHELL: Yes, I have. 

24 SENATOR JOHNSON: And you did that within 30 days 

25 of your appointment or what was the timeframe? 



PETERS SHORTHAND REPORTING CORPORATION 

5336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



3 

MS. MITCHELL: It was very close to my 
appointment. I believe it was within the 30 days. 

SENATOR JOHNSON: Uh-huh. And again, I'm not 
picking on you, I'm just going to ask these questions of 
everybody for a while. These are questions that I haven't 
asked and, frankly, at least in the public confirmation 
period or process hasn't been asked by other members of the 
Committee as well. 

What is your impression of what is required of you 
in terms of not only the letter of the law but the spirit of 
the law with respect to potential conflicts of interest in 
terms of your private financial situation? 

MS. MITCHELL: In terms of the letter of the law, 
my understanding is that my financial situation should be in 
compliance, total compliance with the law. 

SENATOR JOHNSON: Okay. And again, I'm not 
picking on you. 

MS. MITCHELL: Okay. 

SENATOR JOHNSON: But what kinds of advice or 
training or contact, with respect to the reporting 
requirements that you have and complying with both the 
letter and the spirit of the law, have you received from the 
Governor or the Governor's office? 

MS. MITCHELL: I have not received any special 
training, sir. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA '>5t>27 i (916) 362-2345 



4 

1 SENATOR JOHNSON: Thank you very much. 

2 Thank you, Mr. Chairman. 

3 CHAIRMAN BURTON: Senator Romero. 

4 SENATOR ROMERO: Thank you. 

5 Let me just ask you a question. The Women's 

6 Caucus of the State Legislature is very interested in taking 
a closer look at children of the incarcerated, particularly 
of women inmates. Can you tell me what you have done or 

9 what the facility has done to perhaps assist women inmates 

10 so they do not lose contact with their children, visitation 

11 periods, programs that assist the children of the inmates? 

12 Can you give me a better understanding of what you have done 

13 to promote keeping that family together? 

14 MS. MITCHELL: I can give you one specific example 

15 of my efforts to try to continue the bond between female 

16 inmates and their children. For Mother's Day, during the 

17 Mother's Day period of time, there were several inmates who 

18 for some reason or another had not had an opportunity to 

19 visit with their kids, their children in several years — 

2 for several years. So I worked with the Diocese in bringing 

21 the children to the prison so that they would have an 

22 opportunity to visit with their mothers. There were several 

23 inmates that had not seen their children for eight years, 

24 six years, for a period of time. I intend to continue this 

25 program and am evaluating the process of formulating the 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SLTTE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



5 
program for next year. 

SENATOR ROMERO: Thank you. 

CHAIRMAN BURTON: Senator Knight. 

SENATOR KNIGHT: No questions. 

CHAIRMAN BURTON: Senator Karnette. 

SENATOR KARNETTE: I understand that there have 
been some problems with health care in the past and I was 
wondering what you're doing to ensure that the custody side 
and health care work together? What kind of examples can 
you give us to show that this is happening so that health 
care — I know that's a primary concern. 

MS. MITCHELL: Health care is a primary concern, 
especially at our institution since CCWF has the sickest 
inmates in the female population. So we have a very strong 
commitment to providing health care services to those 
inmates . 

As far as the responsibility for health care is 
concerned, I'm committed to working with my health care 
manager cooperatively to make sure that the inmates have 
total access to health care services. The health care 
manager and I meet on a regular basis weekly, we have formal 
meetings with the executive staff to address any concerns 
relative to health care delivery or health care access. 

I meet with the Women's Advisory Committee at the 
institution, which are the inmates. They represent the 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



6 
inmates . I meet with them so that they have an opportunity 
2 to address any issues over and beyond the issues that they 
have addressed with the health care manager to me, so that I 

4 can follow up on those issues if they're outstanding. 

5 I also have activated a position that previously 

6 was activated, but was lost because of the budget, though I 
activated that position. And that position is a liaison to 
the omsbudsperson, and it's a neutral person that the 

9 inmates have access to in case they have any problems. 

10 I have created an additional transportation team, 

11 so that inmates will — we will have more staff to take 

12 inmates out for health care services delivery. I've also 

13 just recently been able to work with the prison — we have a 

14 prison across the street, Ballard State Prison for Women, to 

15 work with them in reducing the number of staff that it takes 

16 to provide coverage at the hospital, which will allow us to 

17 have additional staff so that we can take additional — a 

18 greater number of the inmates out for medical treatment. 

19 SENATOR KARNETTE : I was interested in your 

2 comment that you have more ill inmates because people are 

21 shipped to your facility from other prisons. Is that what I 

22 heard? 

2 3 MS. MITCHELL: Yes, that's what you heard. We 

24 have a skilled nursing facility at our prison, a licensed 

25 skilled nursing facility, and therefore we're able to 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (9161 362-2345 



7 
provide a slightly higher care of medical — level of 
medical care, not the type that we do in a hospital, but to 
provide the care for those inmates . So since we do have the 
skilled nursing facility and inmates that are very sick, 
inmates that are terminal, inmates that need chronic care 
treatment, et cetera, are sent to Central California Women's 
Facility. 

SENATOR KARNETTE: Thank you. 

MS. MITCHELL: You're welcome. 

CHAIRMAN BURTON: Do you have any family with you 
that you'd like to introduce? 

MS. MITCHELL: Yes, I do, if I may. 

CHAIRMAN BURTON: Go ahead. 

MS. MITCHELL: Thank you. I have my father, 
Richard Greg. My son, Carlisle Frank Mitchell, from 
Houston. My daughter, Chauncet Mitchell-Thomas, from 
Houston. And my new grandbaby on the way. 

(Laughter. ) 

Her husband and my son, Ensome Thomas. 

CHAIRMAN BURTON: I wanted to ask you a couple of 
questions. You say there are 265 inmates currently on the 
waiting list for vocational program, 244 for academic 
program, that's on page 6 of your prepared statement, and 
177 on the general support service waiting list, which is 
five, six, close to seven hundred, I guess, people on 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 , (916) 362-2345 



8 

1 various waiting lists. What's the total population of your 

2 institution? 

3 MS. MITCHELL: The total population Friday was 

4 3,118. 

5 CHAIRMAN BURTON: So what is that, is that because 

6 of budgetary problems that you have that there are no slots 
for these people or what? 

8 MS. MITCHELL: Well, several of the inmates on the 

9 waiting list are currently employed, however, they're on 

10 waiting lists of classes for programs that they want to get 

11 into that don't have any slots. 

12 CHAIRMAN BURTON: All right. So they may be in A, 

13 but they can't get in B, or vice versa? 

14 MS. MITCHELL: Correct, yes, sir. 

15 CHAIRMAN BURTON: Are there any that are waiting 

16 and there's no slots available or anything? 

17 MS. MITCHELL: Yes, I have approximately a hundred 

18 of them are waiting, but they're waiting for various 

19 reasons, maybe some processing. But I do have two 

2 classrooms that I am currently hiring a teacher for and 

21 those will provide positions for 54 inmates. 

22 CHAIRMAN BURTON: All right. So basically, 

2 3 funding and staffing is not necessarily a great problem in 

2 4 getting them into worthwhile endeavors in there? 
25 MS. MITCHELL: No, sir. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 241). SACRAMENTO. CA 95827 / (916) 362-2345 



9 

CHAIRMAN BURTON: I'm reading the drug thing and 
it's just kind of — and I know you won't have the answer, I 
don't think you would, but kind of out of curiosity. 

In 2000 you confiscated 67 grams of heroin, 47 
grams of marijuana, which is a lot of marijuana, and less 
than a gram of cocaine, which is really hardly any. And 
then if you go through May of this year, the heroin, at 
least percentagewise, is down, the marijuana percentagewise 
is way down, cocaine is a little bit up, and then 
methamphetamine , which didn't show on the other, is up. 

Is there any way to know why there's so little 
cocaine, and although it isn't — I mean it's a lot, but 
isn't that a lot of heroin and marijuana. It's like three 
ounces, which again is not a lot of marijuana. I guess 
there ' s no way to know why which drug is a drug of choice 
for people in there, or did people — yet you find with a 
drug, let's say it was heroin, can you go back and then look 
at their record or history and see whether or not they got 
in as drug related or they were addicts or something? What 
do you do besides the discipline if you catch somebody say 
with something like heroin, as opposed to marijuana? Do you 
go see if they're addicted and try to get them into a 
program, or how do you do that? 

MS. MITCHELL: Usually, there is some indication 
in a person's central file of whether they have past drug 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 ' (916) 362-2345 



10 

1 usage or not. It's not necessarily true, because they could 

2 have acquired it after formulation of their central file. 

3 However, we do have a substance abuse program at the prison. 

4 The substance abuse program has 506 slots, and inmates that 

5 have up to 18 months left before they parole are eligible 

6 for the program. Over and beyond that, we also have 
substance abuse classes at the institution that are 

8 available to the inmates that may not be leaving within a 

9 short period of time. So we do have some programs that the 

10 inmates can access. And then we do mandate for that 

11 particular issue. 

12 CHAIRMAN BURTON: So if like you catch somebody 

13 with heroin or something, besides the discipline, you 

14 mandate them into a program or what? 

15 MS. MITCHELL: Yes. In fact, Title 15 has as part 

16 of the disciplinary process a mandate into a substance abuse 

17 program. 

18 CHAIRMAN 3URT0N: I guess the stuff can get in in 

19 a variety of people, the visitors, God forbid with 

20 employees, or somehow, but this doesn't really — I'm not 

21 denigrating, but it doesn't seem like that with 3,100 

22 people, 117 grams of stuff doesn't seem like — I mean it's 

23 a problem, but it's not like a monumental problem as such. 

24 MS. MITCHELL: I would say that it's not as 

25 monumental as you may find in some institutions. 



PETERS SHORTHAND REPORTING CORPORATION 

5336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 . (916) 362-2345 



11 

CHAIRMAN BURTON: Yeah, it's still too much. 

MS. MITCHELL: But I would like to think that our 
programs are being successful. 

CHAIRMAN BURTON: Yes. Well, it looks like — at 
least like I say the difference from the first five months 
of this year versus all of last year, it looks like, as I 
said, heroin's down, marijuana's way down, cocaine is up a 
tad, and then all of a sudden methamphetamines are showing 
up for whatever point. 

Witnesses in support. 

MR. MABERY: Chairman Burton and Rules Committee 
Members, my name is Roy Mabery, I'm the State President, 
Association of Black Correctional Workers. Thank you for 
the opportunity of speaking in support of Warden Mitchell. 
And I'm here representing our organization, and I want you 
to know that we give her a hundred percent support 
organizationally and personally. If the percentages would 
reach to 200, based on the way I've seen her present and the 
way she's carried herself and performance and the history 
that she has in custody, I would definitely allow 200 
percent performance. So with complete support, Senator 
Johnson. 

CHAIRMAN BURTON: Next please, briefly. 

Yes, . sir. 

MR. AMIS: Good afternoon, my name is Jim Amos. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 2M). SACRAMENTO. CA 95827 (916) 362-2345 



12 
I'm currently the Supervisor of Academics at CCWF, and I'm 

2 just here to very strongly support Warden Mitchell and the 
confirmation process here. In the time she's been at CCWF 

4 I've come to know her as an education advocate and I believe 
she's courageous and is a fine visionary leader. I strongly 

6 support her confirmation. 

7 CHAIRMAN BURTON: Thank you. Next please. 

8 MR. MITCHELL: My name is Carlisle Mitchell. I'm 

9 the son of Gwendolyn Mitchell. I'm in support of her 

10 confirmation. 

11 (Laughter. ) 

12 CHAIRMAN BURTON: And you better be. 

13 (Laughter. ) 

14 MR. MITCHELL: For twenty plus years I've 

15 witnessed her support of the ideals of the California 

16 Correctional Facility. For all of her positions, she's 

17 brought character, integrity, and determination, and I have 

18 every reason to believe that she'll continue with those 

19 qualities. 

2 CHAIRMAN BURTON: Thank you, sir. 

21 Next please. 

22 MS. THOMAS: Good afternoon, my name is Chauncet 

23 Thomas, and I bring greetings from the great state of Texas 

24 and the city of Houston. I'm here to support my mother, 
2 5 Gwendolyn Mitchell, for her confirmation, and I want to 



PETERS SHORTHAND REPORTING CORPORATION 

3336 8RADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95327 , (916) 362-2345 



13 
briefly share with you the personal side of her that many 
people may not know, but it's consistent with the 
professional side of her. 

Though she never required that we obtain a certain 
level or place in life, she did require that we do our best. 
She did that by encouraging us and setting superior examples 
herself. One example is concerning education, of which she 
is a great advocate. My mother is a woman of integrity who 
honors her word. She doesn't judge people based on 
socioeconomic, cultural background, or appearance, but 
embraces diversity. To her everyone deserves an 
opportunity. I never worked for her professionally, 
however, I know she — I know how she is from 5:00 p.m. 
until 9:00 a.m., and I can't imagine her being any different 
from 9:00 a.m. to 5:00 p.m. I support her very much 
wholeheartedly 100 percent, and the baby does too. Thank 
you. 

(Laughter. ) 

SENATOR JOHNSON: Are there any members of your 
family who oppose you? 

(Laughter. ) 

MR. DREGAN: Hello, my name is Richard Dregan, I'm 
the father of Gwendolyn Mitchell, and I strongly support 
her. And I think I know her about as well as anyone else in 
this room, and I definitely feel that — think that the 



PETERS SHORTHAND REPORTING CORPORATION 

3336 3RADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95S27 (91ft) 362-2345 



14 

1 things that she intend — and to bring forth to the prison 

2 will be of great — would be a great improvement and a great 
asset, and it would be a reduction to the taxpayer with all 

4 her ideas and her plans of educational accomplishment. And 
I got a feeling she would do it, if given the opportunity. 

6 SENATOR KNIGHT: Mr. Chairman. 

7 CHAIRMAN BURTON: Yes. 

8 SENATOR KNIGHT: A question to the father. 

9 MR. DREGAN: Right. 

10 SENATOR KNIGHT: Since you know her so well, and 

11 you've probably known her longer than anybody, can you tell 

12 me anything that we ought to be aware of? 

13 (Laughter. ) 

14 MR. DREGAN: No. I think that it will all come 

15 out in the wash. 

16 (Laughter. ) 

17 SENATOR KNIGHT: Thank you. 

18 CHAIRMAN BURTON: Next. 

19 MR. KENT: Mr. Chairman and Committee Members, 

20 thank you for this opportunity. My name is Stephen Kent, 

21 correctional lieutenant at the facility, and I'm the chapter 

22 president for the California Correctional Supervisors 

23 Organization. Many of the sergeants and lieutenants at our 

2 4 facility, which I represent — we are in full support of the 

2 5 warden. We respect her for her experience and her sense of 



PETERS SHORTHAND REPORTING CORPORATION 

5336 BRADSHAW ROAD. SUITE 24(1. SACRAMENTO. CA 95827 (916) 362-2343 



15 
fairness. Thank you. 

CHAIRMAN BURTON: Thank you. Next. 

MR. SANDERS: Mr. Chairman and Committee Members, 
my name is Frank Sanders. I'm the chairperson of the San 
Joaquin Valley chapter of the Association of Correctional 
Workers, and I'm here in support of Ms. Mitchell's 
confirmation as warden. She continues to do an outstanding 
job at the institution and I encourage this committee's 
support of her confirmation. 

CHAIRMAN BURTON: Thank you. 

MR. PETERSON: My name is Charles Peterson, I'm a 
teacher at the Central California Women's Facility, and I'm 
also a steward for the California State Employees 
Association. I'm here to support Ms. Mitchell's 
confirmation as warden of CCWF. 

In my capacity as a union steward, I've had more 
occasions than most of the staff to meet with Ms. Mitchell. 
She has established regular meetings with CSEA stewards and 
she has demonstrated her openness to employee concerns. She 
clearly appreciates the role of the union in helping to 
promote a good working environment at the institution. She 
has attempted to address the concerns of the employees there 
to the best of her ability. CSEA members at CCWF look 
forward to continuing to work with her to solve problems , to 
develop a good working environment. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE MO. SACRAMENTO. CA 95827 ' (91b) 362-2345 



16 

CHAIRMAN BURTON: Thank you. 
2 MS- YOUNG: Good afternoon, I'm Barbara Young. 

I'm the local president of CSEA at the Chowchilla Women's 
4 Prison. I'm also a teacher there. We are in avid support 

of Ms. Mitchell, because she's an avid supporter of 
6 education. We would look forward to and anticipate all the 

further planning we're going to do in development of our 

education department. We have the same goal in that 
9 education is what leads to these women not coming back to 

10 prison. So we support her completely. Thank you. 

11 MR. BABILLA: Good afternoon. My name is Charles 

12 Babilla, I'm the Prison Industry Manager. I met Ms. 

13 Mitchell since November, and she's very supportive of all 

14 the programs, especially Prison Industry's. She has an 

15 open-door policy and very supportive of her staff, and she 

16 treats everybody with respect and dignity, including 

17 inmates. I've seen her in action. She is fair and yet 

18 firm. She is honest, she has a lot of integrity, a lot of 

19 ethics and values, above all, a faith in God. So I'm in 
2 complete support of her. 

21 CHAIRMAN BURTON: Next. 

22 MR. RIVERA: Good afternoon, my name is Manny 

2 3 Rivera, I'm a director for Phoenix House Foundation. I've 
2 4 been working in this field for quite a number of years, 
2 5 including New York, Texas, and now I've been here in 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE MO. SACRAMENTO. CA 95827 / (916) 362-2345 



17 
California for the last five years. I've activated several 
programs here in California and I've had the opportunity to 
work with many, many wardens. And it's been my impression 
and my experience in the time that I've known Ms. Mitchell 
that she is not only a good manager, she also has tremendous 
people skills. And we've had an opportunity to handle some 
very, very sensitive issues, and during that time, I've 
gotten to a point where now not only do I respect her 
managerial skills, but I also respect her integrity and the 
way she carries herself. Any questions? 

MS. MITCHELL: Thank you. 

CHAIRMAN BURTON: Any witnesses in opposition? 

Pleasure of the Committee? 

SENATOR ROMERO: Move it. 

SENATOR KNIGHT: Move it. 

CHAIRMAN BURTON: Please call the role. 

MS. WEBB: Senator Karnette. 

SENATOR KARNETTE: Aye. 

MS. WEBB: Karnette Aye. Senator Knight. 

SENATOR KNIGHT: Aye. 

MS. WEBB: Knight Aye. Senator Romero. 

SENATOR ROMERO: Aye. 

MS. WEBB: Romero Aye. Senator Johnson. 

SENATOR JOHNSON: Aye. 

MS. WEBB: Johnson Aye. Senator Burton. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 241). SACRAMENTO. CA 95827 . (916) 362-2345 



18 

1 CHAIRMAN BURTON: Aye. 

2 Congratulations. 

3 MS. MITCHELL: Thank you. 

4 CHAIRMAN BURTON: Warden, as you leave the 

5 capitol, when you find that pool out there, just see if you 

6 can walk across the water, okay. 

7 (Laughter. ) 

5 CHAIRMAN BURTON: John Hensley, Member California 

9 Gaming Control Commission. 

10 Go ahead, sir. 

11 MR. HENSLEY: Good afternoon, Mr. Chairman, 

12 Members of the Committee. I want to first thank the staff 

13 of the Rules Committee and the Chairman and the staff for 

14 the professionalism and courtesy that have been afforded to 

15 me. 

16 I have over 30 years of law enforcement experience 

17 at the state and local level, and most importantly, at the 

18 federal level. That experience has ranged from working the 

19 street on gambling laws at the state level and the federal 

20 level in areas such as the Bank Secrecy Act, casino 

21 reporting. Additionally, the Customs Service, which I rose 

22 to the top of the civil service position in, was the — was 

23 also a regulatory agency, so I do have an extremely large 

24 regulatory background. 

25 In working during that time period, I had the 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



19 

pleasure and honor of receiving presidential citations from 
Presidents Reagan, Bush, and then the Presidential Rank 
Award from President Clinton just before retiring. I feel 
those qualifications will assist me in chairing the 
Commission in working closely with tribal leaders, the card 
club industry, the administration, and Legislature in doing 
my work. 

And I look forward to answering questions . 

CHAIRMAN BURTON: What's the maximum number of 
gaming machines statewide that the commission's determined 
are allowed by the compacts on tribal land? 

MR. HENSLEY: We have not yet arrived at a final 
number, Mr. Chairman. 

CHAIRMAN BURTON: Do you have any tentative 
numbers? 

MR. HENSLEY: No, we do not. We're working with 
the tribal leaders now, and we're working in the process to 
establish that number in the very near future, but we have 
not done that now. We're currently in meet-and-conf er 
sessions under Section 9 of the compact on some of these 
very issues, this one included. 

CHAIRMAN BURTON: How have the licenses for the 
slots been issued up to now? 

MR. HENSLEY: Up until this time, they were issued 
via a private CPA firm from Auburn, California, which was 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



20 
initially employed to issue licenses at the start of the 

J process, after the compacts and before the Commission was 

3 actually put into existence. 

4 CHAIRMAN BURTON: And what steps do you intend to 
follow to change how the slot devices and how would you 

6 propose to implement the licensing partnerships with the 

7 tribes? 

8 MR. HENSLEY: Well, the process, we believe, is a 

9 process to work in a consultive and close manner with all 

10 the tribal leaders. We believe in a methodology that will 

11 be borne of conversations and discussions with all tribal 

12 leaders, and we hope to come to a resolution on how the 

13 process will work, and we're in the throes of doing that at 

14 this very time as we're just now gearing up. But we hope to 

15 do that very, very soon. 

16 CHAIRMAN BURTON: Is the revenue sharing 

17 distribution gone out yet? 

18 MR. HENSLEY: It has not, Mr. Chairman. It will 

19 go out on the 29th of this month. 

2 CHAIRMAN BURTON: What's taken so long? 

21 MR. HENSLEY: The process involved gaining 

22 information from various sources, including the tribes and 

23 from the former CPA firm, which we finally served a subpoena 

24 to gain that information. We were unable to get that 

2 5 information from the former CPA firm. We have now had the 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 I (916) 362-2345 



21 
Department of Justice serve a subpoena for that information , 
so we will have more. 

But the tribes were cooperative over a period of 
about two months, and in May we finally got the needed 
information so we could award money to the tribes based upon 
the number of machines they have. The law says, over 350 
machines, you cannot receive funds, and we've had to sort 
that out, because there were some that had over 350 
licenses, but had not yet gone into operation, so we had to 
verify all those things with the tribes. We have now done 
that. 

CHAIRMAN BURTON: And you have a CPA that was 
hired by whom? 

MR. HENSLEY: He was hired by the tribes with the 
consent of the State at the start of the process. 

CHAIRMAN BURTON: And the CPA wouldn't give 
information? 

MR. HENSLEY: That's correct. 

CHAIRMAN BURTON: Why? 

MR. HENSLEY: He stated that he had 
confidentiality agreements and could not share that 
information with the State unless subpoenaed. So we did 
issue subpoenas. 

CHAIRMAN BURTON: And he was asking for — he 
needed a friendly subpoena or what? 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 . (916) 362-2345 



22 

MR. HENSLEY: Well, it was a just a subpoena, I'm 

2 not sure how friendly it is, but he's being cooperative with 

3 us now that the subpoena has been issued. 

4 CHAIRMAN BURTON: Yes, I would think so, otherwise 
you'd have a contempt and he'd end up being in jail, so 

6 that's kind of an easy way to cooperate. 

7 MR. HENSLEY: That's correct. 

8 CHAIRMAN BURTON: All right. So a tribe has more 

9 than 350 machines, then they're not eligible to revenue 

10 share? 

11 MR. HENSLEY: 350 machines in operation. 

12 CHAIRMAN BURTON: Yes, okay. So basically, if you 

13 have a tribe that was authorized 400, and they either, one, 

14 didn't get them or they had 2 99 operating and they didn't 

15 plug in the other hundred, I mean, how do you determine 

16 whether it's like a legitimate thing or whether someone 

17 could sit and have it both ways? 

18 MR. HENSLEY: Well, at the outset we've asked the 

19 tribes to self-report and to self-certify. We did ask the 

20 Attorney General on two occasions to send agents to the 

21 casinos and make a count, which is like a snapshot in time. 

22 So although it's not complete information, it did tend to 

23 validate what was on the reports, and so it gave us a fairly 

24 accurate picture, although incomplete. That coupled with 

25 the tribal information gave us the right information. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 ' (916) 362-2345 



23 

CHAIRMAN BURTON: Senator Johnson. 

SENATOR JOHNSON: As you heard earlier, I asked 
the last appointee a series of questions, and I intend to 
continue to ask these questions. So I'm not picking on you. 
You did apparently file your Statement of Economic Interest 
in a timely fashion after receiving this appointment? 

MR. HENSLEY: Yes, I did. I filed actually two. 
I just updated with a new one about two weeks ago. 

SENATOR JOHNSON: Okay. And you're satisfied that 
those forms are completed to the best of your ability? 

MR. HENSLEY: Yes, I am. 

SENATOR JOHNSON: The next question is, I'm going 
to reverse the order of them just slightly from how I asked 
them earlier. And that is, did you receive any information, 
any advice, any counseling from the Governor's office with 
respect to your legal obligations and what constituted 
conflict of interest, any what might be characterized as 
conflict of interest training, or at least a bit of big 
brotherly advice from the Governor or anyone on the 
Governor's staff? 

MR. HENSLEY: I received it from the FPPC. I sat 
down and went through their training course and watched the 
videos and read their materials. So I'm pretty — 

SENATOR JOHNSON: Was that on your own initiation 
that you contacted the FPPC? 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



24 
MR. HENSLEY: Yes, I did. 

2 SENATOR JOHNSON: I see. So I take it that the 

3 answer to the question that was posed is no? 

4 MR. HENSLEY: That's correct. 

5 SENATOR JOHNSON: Thank you. And just finally, 

6 and again I'm not picking on you, I'm just going to ask 

7 these questions — 

8 MR. HENSLEY: Certainly. 

9 SENATOR JOHNSON: — for a while. What is your 

10 impression, having filled out the forms, having gone through 

11 some training with the Fair Political Practices Commission 

12 on the kinds of ethical standards that you should be held 

13 to? 

14 MR. HENSLEY: I think as an appointee, we should 

15 be held at the very highest levels of ethical standards. I 

16 think that there should not be a shadow or even a hint of a 

17 shadow of conflict among any official at the top of the 

18 government chain. For that matter, anybody in the 

19 government. I think that there has to be a clear ethical 

2 wall or white line, and I've lived in that world for a long 

21 time, and so I'm very comfortable with it and I think that 

22 should be the standard. 

23 SENATOR JOHNSON: Thank you. 

24 Thank you, Mr. Chairman. 

2 5 CHAIRMAN BURTON: Senator Romero. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 24<). SACRAMENTO. CA 95S27 / (916) 362-2345 



25 

SENATOR ROMERO: Can you tell me what steps you're 
taking towards hiring an executive director, when you 
anticipate filling that position? And if you could also 
delineate for the Committee the role that Mr. Traverso is 
currently playing in the Commission? 

MR. HENSLEY: I'll be glad to. We have a 
continuous announcement out for an executive director. We 
had two or three candidates that we thought would fill the 
bill and it didn't pan out, primarily on their side. Mr. 
Traverso was hired as an independent contractor some seven 
months ago and fulfilled that contract. He is no longer a 
continuing contractor. We have one special contract for him 
which was a six-week contract, a small amount of money to 
set the process for rules or regulation, but not regulation 
itself. And so he has no role as enacting anything on the 
Commission. 

SENATOR ROMERO: Thank you. 

CHAIRMAN BURTON: Senator Knight. 

SENATOR KNIGHT: Yes, thank you, Mr. Chairman. 

The Federal Indian Gaming Control Commission has 
adopted what is called a Minimum Internal Control Standards, 
that each of the tribes must follow in operating gambling 
casinos. What are your thoughts on the National Indian 
Gaming Control Commission's Minimum Internal Control 
Standards, and wouldn't it be easier for California 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 ' (916) 362-2345 



26 

1 regulations if regulations were based on these federal 

2 standards? 

3 MR. HENSLEY: The answer is yes to both of those, 

~ Senator. The National Indian Gaming Commission's standards, 
the Minimum Internal Control Standards are good. I've read 

6 them and we are going to apply those. The compacts call for 
a mandatory state uniform set of regulations, and we intend 

8 to follow and mirror for the most part the national 

9 standards. So there is not a new set of rules or 

10 reinventing the wheel for tribal governments. I would add 

11 that the tribal governments for the most part have already 

12 initiated many of those. 

13 SENATOR KNIGHT: I'd assume they had, but as far 

14 as the Commission is concerned, did you ask the staff to 

15 implement those kinds of standards, and is that your plan? 

16 MR. HENSLEY: We intend to, because the compact 

17 calls for it, but it's to be worked with the association 

18 which is a tribal government group described in the 

19 compacts, about 125 people, two from each tribe, and then 

20 the Attorney General's office and the Commission. And we'll 

21 be working jointly on developing those State regulations. 

22 SENATOR KNIGHT: Do you have a timeframe as to 

23 when that may happen? 

24 MR. HENSLEY: We're already gathering the uniform 
2 5 standard operating procedures from most of the tribes. I 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95S27 / (916) 362-2345 



27 
think we have about 35 now. We're going to go through and 
look at those, identify those which are similar, and we can 
just put those in operation. We intend to do it in probably 
three stages. Those regulations that are deemed to be most 
needed will be done first, dealing primarily with monetary 
issues, and we hope to do something by the end of the year, 
and then we ' 11 phase in the other two parts of the 
regulations after that. 

SENATOR KNIGHT: How many in the tribes have the 
minimum control standards in place, and if they don't, what 
standards are they using? 

MR. HENSLEY: All the tribes which presently have 
casinos open have various degrees of internal control. Some 
of the manuals are very thin and some are very thick and 
complete, but all of those which have casinos open right 
now. There are 4 7 casinos out of the 61 compacted tribes, 
and they all have a set of regulations to operate by. Some 
of them will be made more complete as the process goes 
through. 

SENATOR KNIGHT: Thank you. 

CHAIRMAN BURTON: Senator Karnette. 

SENATOR KARNETTE: Do you see the ultimate 
regulations that you envision as complete, will that apply 
to all the tribes unilaterally, or will each tribe have 
different regulations, they all have to meet the federal 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



28 
standards, but how do you come to compromise on that? 

MR. HENSLEY: Well, I think there's a provision to 
do this with the association, and I'm hopeful that as we 

4 develop jointly a uniform set of regulations that are 
reasonable, all tribes will seek to adopt those. There is 

6 an alternate section of the compact under Section 8 where 
the Commission, if there is conflict, can in fact initiate 

5 regulations through the normal regulatory process. So we 
9 feel confident that we can put regulations in place and 

10 after all the goal is to keep California gambling above 

11 reproach and keep corruption out of the state of California, 

12 which I think serves both tribal governments and I know they 

13 have expressed this, and the state of California. 

14 SENATOR KARNETTE : So if you don't come to a 

15 consensus, you do have an approach, who will enforce it if 

16 you can't come to consensus. 

17 MR. HENSLEY: Well, I think that the Commission, 

18 the Gambling Control Commission, has to initiate the Section 

19 8 action of actually going forward and moving on regulation 

2 independently. But it would only be after — it would be an 

21 impossible goal to reach and I optimistically think that we 

22 can do regulations. Everybody that I've talked to seems to 

23 indicate this is not a big problem. 

2 4 CHAIRMAN BURTON: When the payments go out to the 

25 non-gaming, is it going to go out equal shares, pro rata 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 ' (916) 362-2345 



29 

shares, or you know? 

MR. HENSLEY: Mr. Chairman, the first iteration of 
the payments is equal, and it's based on a hundred thousand 
dollars per quarter. Some tribes are getting two quarters 
because their machines went in operation in the third 
quarter, so they're receiving $200,000, and there's a few 
tribes in that category. The rest are receiving $300,000, 
which is $100,000 per quarter. 

The issue of equal versus pro rata is a thorny one 
for us, and we issued these payments based on equal because 
it was expedient, because we had no staff, and it also falls 
under — even under a pro rata distribution of what would be 
an annual ceiling of the $1.1 million. So we feel we were 
in fairly good shape to do it that way. 

Pro rata is a thorny issue for us. We took 
testimony at three separate Commission meetings from tribal 
leaders and tribal associations. We also looked at the 
original language of the compacts and the accompanying 
letters issued by the negotiators. And also the current 
language out of the Coyote Valley decision, which tends to 
indicate a support for pro rata, which is not pro rata by 
member or by tribe, but rather than by machine. And so 
we're continuing to look at it and will be persuaded 
possibly to change that, but that's how we came to the 
decision. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



30 

CHAIRMAN BURTON: A cap to give out to non-gaming 
tribes in total is a million one, or no more than a million 

3 one to a tribe? 

4 MR. HENSLEY: Yes, it's 1.1 million per tribe 

5 that's eligible. 

6 CHAIRMAN BURTON: And how many tribes that have 

7 chosen to go not gaming are there? 

8 MR. HENSLEY: There are 61 compacts, that would 

9 leave about 4 9 tribes which have chosen not to sign compacts 

10 or go into gaming. 

11 CHAIRMAN BURTON: And then they would in theory 

12 when things get going receive a million one? 

13 MR. HENSLEY: Yes. And there are some tribes 

14 which have signed compacts but have not yet chosen to 

15 initiate gaming. So the actual number right now that are 

16 eligible for some form of payment is around 82, counting 

17 those that are under 350, plus those that are not compacted 

18 tribes. 

19 CHAIRMAN BURTON: So what was the purpose of, for 

20 want of a better word, revenue sharing? I thought in my 

21 ignorance that was to go to the tribes that chose to be 

22 nongaming tribes, as opposed to a tribe that chose to be a 

23 gaming tribe but held up sending in their application or 

24 something for a while? 

2 5 MR. HENSLEY: I believe — as I understand it — I 






PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAVV ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



31 
was not there at the initial compact negotiations that 
initially started between gaming and non-gaming and the 
terminology was changed and the definition was changed 
during the compact negotiation. That is some support for 
the pro rata approach, because as the language said and the 
negotiations said, it did not want people dipping out of 
both pots. And so if we looked at pro rata, it was to 
reduce the amount to those tribes. The more machines they 
had, the less money they get. 

CHAIRMAN BURTON: So if Tribe A has 250 machines, 
Tribe B, because of where they're located or whatever, 
chooses not to be involved in gaming, they would both get a 
million one? 

MR. HENSLEY: Yes. 

CHAIRMAN BURTON: Well, that's makes no sense. 

MR. HENSLEY: I agree with you, but that's exactly 
what it says. The million one is a pretty absolute number. 
The pro rata up until that point I think you can justify. 

CHAIRMAN BURTON: Why would not every tribe in the 
world decide to go for — you know, go up to get right up to 
wherever the magic number is and go for the slots and figure 
out they get a million one and the rest is ice cream? 

MR. HENSLEY: That's a very distinct possibility 
that could happen and may have happened. 

CHAIRMAN BURTON: That shows you what happens when 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 ■' (916) 362-2345 



32 
the State negotiates with five minutes to midnight. For all 

2 you know somebody might end up with two casinos, right? 

3 What are you laughing at Mark? Nothing, huh? 

4 Okay. Witnesses in support. 

5 MR. HUNT: My name is Ted Hunt. I'm representing 

6 the Los Angeles Police Protective League and the Association 
for Los Angeles Deputy Sheriffs, which comprise about 15 

8 percent of all police and sheriffs in this state. We 

9 believe that John Hensley is highly qualified and his 

10 experience is tailored to this position so that he will help 

11 to prevent problems in the gaming industry. And in the 

12 interest of time, we would also like to add our support to 

13 J. K. Sasaki and Arlo Smith, the father of a good friend of 

14 mine. 

15 CHAIRMAN BURTON: Okay. Are you stiffing Michael 

16 Palmer? 

17 (Laughter. ) 

18 MR. HUNT: No, sir. I just don't know him. 

19 CHAIRMAN BURTON: Okay. 

2 MR. YARYAN: Tim Yaryan, representing the 

21 Association for Los Angeles Deputy Sheriffs. I'll reiterate 

22 what Mr. Hunt said. I was up in Appropriations, and we 

23 would support all the members of the Commission, but 

24 particularly Mr. Hensley. He's had a distinguished career 

2 5 in law enforcement and is eminently qualified, a fair man, a 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



33 
good man, we urge your support. 

CHAIRMAN BURTON: Next witness. 

MR. LAWSON: My name is Chairman Alan Lawson, I'm 
the proud chairman of the San Pasqual band of Mission 
Indians in San Diego County, and we strongly support the 
Commission and Mr. John Hens ley. We have worked with him 
for quite a number of months now, and we have learned to 
realize that he is a man of his word, he is a man that wants 
to work with us, and we strongly support him and his 
commission. 

CHAIRMAN BURTON: Yes, sir. 

MR. CURRIER: Hi, I'm John Currier, Chairman of 
the Rincon San Luiseno Band of Mission Indians. As a tribal 
chairman representing my band, we are here to support the 
confirmation of John Hens ley, Arlo Smith, J. K. Sasaki, and 
Michael Palmer to serve on the Gambling Control Commission. 

On September 10th, 1999, the Rincon Band had no 
slot machines, and on May 15, 2000, the Rincon Band put out 
loan monies in the amount of $2,622,250 to Sides Accountancy 
Incorporated, plus their fees of $5 per license. This 
amount was to purchase 1,650 licenses so that the Rincon 
Band could implement a total of 2,000 gaming devices. On 
May 15th, 2001, the Rincon Band put into play its 2000 
machines. Today we're approximately one year away from 
implementing the final phase of a hundred and twenty five 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



34 
million development. 

Still today the Rincon Band doesn't have licenses 
that the State has agreed are licenses. The Rincon Band 
4 needs a body that it can work with for the purposes of 

having security that its licenses are valid or that they are 
6 validated. 

As one of the four tribal leaders who were voted 

8 amongst the tribes to be on the front lines of the 

9 negotiations , I truly do have firsthand knowledge as to what 

10 difficulty lies ahead of those who serve on this commission. 

11 This commission will be charged with weeding through 

12 language that is extremely ambiguous. They will have to do 

13 the best they can to understand the intent of language that 

14 when interpreted one way may have a very negative or 

15 causative effect on another tribe or other tribes. 

16 The board members of this commission, and 

17 especially the chairman of this commission has their work 

18 cut out for them. With the negotiations that will come in 

19 approximately a year and a half, it is important to get this 

20 commission confirmed and on its way. Many tribes will have 

21 difficulty finding investors until many of the issues that 

22 lie unanswered are resolved, as well as tribes that have 

23 investors need security with the process and a body that 

24 they can work with. 

25 The Rincon Band believes that this commission, and 



PETERS SHORTHAND REPORTING CORPORATION 

333ft BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 , (916) 362-2345 



35 
especially John Hensley as the Chairman and leader of this 
commission will do a fine job to implement the compact as 
was intended. We believe that John Hensley and this 
commission are up to speed and have the momentum going, and 
not to confirm them now would only delay the Tribal/State 
compact from being implemented. This could affect the 
tribes who would like to see their revenue sharing continue, 
as well as tribes who have to implement their gaming 
operations . 

Over the course of time there will be differences 
as to the Commission's positions on various issues. But we, 
the tribes, have the meet-and-confer process, dispute 
resolution, and court if need be to flush out the 
ambiguities of the compact and its intentions. Having said 
the above, the Rincon Band again asks this body to once and 
for all confirm the Commission so we can fully appreciate 
our rights to the Tribal/State compact. 

I thank you for your consideration, and based upon 
the questions that you all asked earlier of Mr. Hensley, I 
think you understand when I talk about ambiguities, et 
cetera, et cetera. Because there certainly are issues with 
the compact, and whoever you put into this position is going 
to have a very difficult time. 

We have personally talked to Mr. Hensley, we've 
met with many tribes that met with Mr. Hensley. He's been 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 241). SACRAMENTO. CA 95627 .' (916) 362-2345 



36 

1 very up front, very forward with us, and understanding. He 

2 appears, as well as this commission, to want to work these 
issues out in the best interest of all. As a matter of 

4 fact, on the Rincon project we have today, we have about 60 
to 7 percent unions working on our project, I just thought 

6 you might want to know that, Mr. Burton. 

7 MR. BROKAW: Mr. Chairman and Members, Barry 
Brokaw on behalf of the Agua Caliente Band of Puela Indians 

9 here to support the confirmation proceeding for Chairman 

10 Hensley, and also Commissioner Palmer. The fact that we 

11 haven't written a letter in support of Commissioner Smith or 

12 Sasaki indicates no dissatisfaction with those members, we 

13 just haven't had the opportunity to work with them one-on- 

14 one thus far. 

15 Mr. Hensley, in particular, has given us great 

16 leadership, he's been very direct and straightforward and 

17 open with us. We've engaged in several discussions with him 

18 and are very pleased with how he's administering the 

19 compacts, and we urge your serious consideration and support 

20 of his and the Commission's confirmation. Thank you. 

21 CHAIRMAN BURTON: Have you found Chairman 

22 Milanovich very open, straightforward, and succinct? 

23 MR. BROKAW: He's a man of immense knowledge and 

24 few words. 

25 MR. BLONIEN: Thank you, Mr. Chairman and Members, 






PETERS SHORTHAND REPORTING CORPORATION 

3336 3RADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



37 
Rod Blonien representing the California Commerce Club in 
support of Mr. Hens ley as Chairman, Mr. Smith as a Member, 
Mr. Palmer as a Member, and Ms. Sasaki as a Member of the 
Gaming Commission. As I think many of you know, the 
Gambling Control Act cleared this house in 1997. In '98 
Governor Wilson had the opportunity to appoint to the board 
and he didn't, and Governor Davis came in and he had the 
opportunity to appoint a commission in 199 9, but he didn't 
until late last year. 

We are very happy with the appointments that have 
been made. As you may know, each member represents a 
specific discipline in terms of rounding out the board, and 
we think that each member is highly qualified and brings 
unique qualities and attributes to the Commission, and we 
say — we'd like to see them all confirmed and, again, we 
believe that they are people of high capability and high 
integrity. 

CHAIRMAN BURTON: What's your jurisdiction over 
card clubs? 

MR. BLONIEN: They have the — they act — the 
Division of Gambling Control in the A.G.'s office acts as 
sort of the police force. The Commission acts as a quasi- 
judicial administrative body that's responsible both for the 
issuance of licenses and permits. They also have the 
ability, of course, to pull those permits and pull those 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 , (916) 362-2345 



38 

1 licenses. 

2 CHAIRMAN BURTON: They do? 

3 MR. BLONIEN: Yes, they do. 

4 CHAIRMAN BURTON: And is that the same with the 

5 tribes, or you totally control the tribes? 

6 MR. HENSLEY: No, it's the — 

CHAIRMAN BURTON: Is it the same process? 

8 MR. HENSLEY: The same division between the 

9 Attorney General's office and the Commission exists on the 

10 compact side, however, our regulation authority is much 

11 narrower on the compact side than it is on the card club 

12 side. 

13 CHAIRMAN BURTON: Well, I think there's been a 

14 concern over the duality of responsibility with some of the 

15 tribes, I think, between you and the A.G.'s office about — 

16 I don't know whether — you know, who's allowed to have 

17 slots, how many slots. I know one of the problems they've 

18 had is they were kind of getting missed. And I mean, did 

19 you have more authority than the A.G.'s office over this or 

20 how the hell does it work? 

21 MR. HENSLEY: What we did, Mr. Chairman, was 

22 initiate an interagency agreement to define those issues. I 

23 think it was more external than it was internal. We have a 

24 good relationship with the Attorney General's office, and as 
2 5 Mr. Blonien said, they function more as a police agency and 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 2-H). SACRAMENTO. CA 95827 , (916) 362-2345 



39 
we function more as the regulatory licensing, quasi- judicial 
group. So there's a pretty clear definition of the 
difference. But so that everyone had the same program to 
play from, we did an interagency agreement that defines 
those terms and we do have a good relationship. 

CHAIRMAN BURTON: All right. 

MR. LATIMER: Mr. Chairman and Members, John 
Latimer on behalf of the Picayune Rancheria of Chachance 
Indians and the Buena Vista Rancheria of Miwok Indians. In 
the interest of time, I'll associate myself with the 
comments made by a number of the previous presenters . Just 
to add to what was said, our two tribal counsels have had 
extensive dealings with these four commissioners and again 
found them all to be honorable, straightforward, open, and 
accessible people and we look forward to their confirmation 
and urge your support. 

CHAIRMAN BURTON: All right. Thank you. Also not 
present, but we have communications from Corona, Sherwood 
Valley, Santa Rosa, Jackson, and Mituca, in support of the 
nominee . 

Witnesses in opposition. 

Good afternoon, Mark. 

MR. MACARRO: Good afternoon, Mr. Chairman and 
Members of the Committee, I am Mark Macarro. I am the 
Tribal Chairman for the Pechanga Band of Luisano Mission 



PETERS SHORTHAND REPORTING CORPORATION 

5336 BRADSHAVV ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



40 

1 Indians in Temecula, Riverside County, California, and I 

2 represent 1,500 men, women, children, elders, of my 
community. They elected me to articulate their interests. 

4 I would say those interests include an assessment that 
basically is too many questions and too little time in 

6 office. 

7 We've got a situation here where we are very 

8 concerned and we are adamantly opposed to the confirmation 

9 of Mr. Hensley. We think that despite some of the things 

10 you've heard today which — or many of the things that we 

11 have heard as tribal leaders over the last year, that 

12 actions speak louder than words. And the issue that we have 

13 here, the problems we have with the candidate includes 

14 representations that this is how it's going to be, and then 

15 no follow through, or the actual reverse taking place time 

16 and again. 

17 We've concluded that we have — we are looking at 

18 a disrespect of the government, government relationship 

19 that's been established through this compacting and Indian 

20 gaming issue, over the last three years in particular, and I 

21 think that Mr. Hensley and former Interim Director Traverso 

22 are singlehandedly responsible for the train wreck, as I can 

23 characterize it, of governmental relations between tribes 

24 and states right now, and for divisiveness that exists right 
2 5 now . 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 , (916) 362-2345 



41 
In a meeting with tribal organization, Mr. Hens ley 
characterized the tribal situation here in California as one 
of having to deal with the emerging tribes, some of whom 
we've heard from here, and hardliner tribes, and I think a 
vague reference to have-not tribes. And that kind of 
mindset and divisiveness is not healthy or productive to the 
job that we need to do between governments here in 
California. I think that we need as the Chairman of the 
Commission here, an individual who is a consensus builder. 
While the rest of the state may need a czar for 
gambling, and certainly Senate Bill 8, the Bill Lockyer bill 
probably calls for a czar, the role for — with regard to 
Indian gaming and compacts is not only much narrower than 
that as was characterized a few minutes ago, but it is 
rather ministerial. It's a role that is a trustee for a 
trust fund, and that's essentially it. It is — all those 
other czar type duties, that's all relevant to nonlndian 
gaming. 

Yet for the better part of this past year, we've 
had to deal time and again — I think an example of this 
would be a reference you already heard to commissions, the 
activities of the commission where testimony was received by 
tribal leaders. That's not the kind of forum that tribal 
leaders should be participating in per se. You've got 
members of the Commission on their dias elevated from the 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95S27 ■' (916) 362-2345 



42 
role — or the tribes are providing that date — receiving 

2 testimony on behalf of the State, issues that should be 

3 worked out in other forums, that is not one of the kinds of 

4 things. 

5 We need a consensus builder in this position, and 

6 I think that with regard to the rest of the Commission, we 
can stand with the other tribes, Commission Sasaki, Smith, 
and Palmer, we have no quarrel with them. Nor do we have 

9 any quarrel with the role of the Commission in the scheme of 

10 things. Absolutely necessary, agreed to, big concession, I 

11 think, by the tribes in the development of the compacts, and 

12 it's there. But the personality is something that is making 

13 it very difficult to achieve what I believe we were supposed 

14 to be working toward in this compact. 

15 CHAIRMAN BURTON: Well, I mean, just because they 

16 hold a public hearing and take testimony, I mean how else 

17 would you get information? I don't know, maybe the Chairman 

18 of the Commission knows, but I imagine that before they do 

19 stuff they have to take public testimony. I mean, do you or 

20 don't you, I don't know? 

21 MR. HENSLEY: We do, Mr. Chairman. We've also had 

22 regional meetings that are informal. 

2 3 CHAIRMAN BURTON: Well, leave the informal 

24 meetings aside for a minute, but, I mean, is under the 

2 5 statutory obligation, I mean, you're required before you do 



PETERS SHORTHAND REPORTING CORPORATION 

5336 BRADSHAW ROAD. SUITE 24(1. SACRAMENTO. CA 95S27 i (916) 362-2345 



43 
something to hold public hearings and take public testimony? 

MR. HENSLEY: Absolutely. A commission by law is 
required to hold a public hearing and take their actions in 
public. 

CHAIRMAN BURTON: All right. So your concern, 
Chairman Macarro, is — and I'm trying to get a fix, because 
this is — well, it's not the first time that I've seen a 
split, you know, in the tribal community, but the only 
opposition that we've gotten has been from — at least that 
I know of, has been from your tribe. Is it he's been 
disrespectful because he defined that there would be a 
merging tribes, which there are, there would be — okay, I 
thought that ' s what I heard where the tribes that were 
already in business, like you, then hardline tribes and 
whatever, and I've always considered the hardest of hard 
lines myself, but I'd like you to really explain because I'm 
having trouble seeing what the problem, you know, either 
perceptionally or actually is with the way that, you know, 
that you feel that you and the tribes have been developing a 
platform in this regard. 

MR. MACARRO: I think in particular, Mr. Hensley's 
created an atmosphere of distrust by telling tribes 
essentially what they want to hear. I think there's a group 
of tribes that are basically here because they've heard 
those very things. That's exactly what I'm talking about. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95SJ27 / (916) 362-2345 



44 
Let me give you an example though. 
CHAIRMAN BURTON: All right. Just so that this 
helps. Like you say to me, what we want to do is get, you 
know, blah, blah, blah, blah, blah, and I say to you 
absolutely yes and then it never happens, is that? 
6 MR. MACARRO: Kind of, yeah. There were promises 

made to tribes at a meeting on May 7th, and then those 

8 promises were broken within a week or less. One of those 

9 was to stop beating up on tribes for not caring about 

10 regulation. Yet, I think it was — well, certainly within 

11 less than a week Mr. Traverso was out there talking bad 

12 about tribes and their lack of consideration for regulation. 

13 Broken promise. 

14 CHAIRMAN BURTON: Publicly in the press or out — 

15 MR. MACARRO: Yes, yes. 

16 CHAIRMAN BURTON: Okay. 

17 MR. MACARRO: And, in fact, even more than that 

18 was that there was a characterization, actually a promise, 

19 that Mr. Traverso would not be speaking to the press 

20 anymore, and yet he did subsequent to that promise. 

21 I think even more germane to the substance of the 

22 compacts, you've heard about these May 15 deadlines, and 

23 basically what it is is a one-year deadline from the time 

24 that a tribe acquires the compacts or licenses to operate 

25 machines, I should say, they have one year to put them in 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



45 
operation. You know, when the compacts were negotiated, we 
conjured up this whole idea, this concept of a draft and it 
was tweaked and tweaked and finally both sides agreeing, the 
Governor, and our understanding was hey, the tribes are 
going to administer this . 

And all this subpoena business, I don't really 
know where that comes from, because the Sides Accountancy 
Corporation that's referenced and the subject of the 
subpoena is they have that mandate to do that. Each tribe 
negotiated a trustee agreement with each of those, and 
that ' s why information could not be obtained from the 
accountant firm, because they were a trustee and they had an 
obligation to us who put that agreement in effect and I mean 
as an individual government to not divulge those things. 
But — 

CHAIRMAN BURTON: Can I ask a question? 

MR. MACARRO: Sure. 

CHAIRMAN BURTON: Well, if the Commission has to 
know how many machines you've got in order to give you the 
nongaming money, if they can't get that, how the hell are 
they going to get the information if they don't get the — 
how could they give out the money if they don ' t get the 
information? 

MR. MACARRO: The answer to that is very 
practical, and the timing of that was that all they had to 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



46 

1 do was ask the Division of Gambling Control at the A.G.'s 

2 office. They had current and up-to-date numbers at that 
time, and that's where what we regarded as a duplication of 

4 roles and duties first came up, was they were asking for 
information that was already obtained and sitting from our 

6 perspective with the State. 

7 CHAIRMAN BURTON: Well? 

8 MR. HENSLEY: I'd just say, Mr. Chairman, the 

9 information was incomplete, I sat with Harlan Goodson, he 

10 gave us everything he had, that was not complete information 

11 for us to do our job. That's why we had to ask for more 

12 information. 

13 CHAIRMAN BURTON: How would you know it wasn't 

14 complete? 

15 MR. HENSLEY: We took the data that he had and 

16 processed it against all the tribes and there were holes in 

17 a lot of the information, it was not readily available, he 

18 didn't have it. 

19 CHAIRMAN BURTON: So I mean Pechanga Tribe's got 

2 2 00 slot machines, I mean, what — so you took the word, you 

21 didn't take the word, or what? 

22 MR. HENSLEY: No, when we first asked for the 

23 information from Mr. Sides, we did not get anything. And so 

24 what we did was — 

25 CHAIRMAN BURTON: Well, why didn't you just go to 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95S27 / (916) 362-2345 






47 
the A.G. first where there's a repository? 

MR. HENSLEY: Well, the first place we went we 
figured was to go to the man who had all the information, 
which is Mr. Sides. We then went to the A.G. 

CHAIRMAN BURTON: No, but I mean, he works for 
them? 

MR. HENSLEY: Yes. 

CHAIRMAN BURTON: So why would he go to the guy 
who works either for you or with you? 

MR. HENSLEY: We asked the A.G. to gather the 
information for us and he went out and made counts for us, 
but that was incomplete . 

CHAIRMAN BURTON: Well, I'm trying to figure out 
the problem here and why did you not think to go to the A.G. 
in person? It's not like a life or death question, it's out 
of idle curiosity. 

MR. HENSLEY: No. I think they were done in a 
very short period of time. We — it was our figuring. I 
would say ours is a group of about five people. We had a 
very small, small staff, and so we felt that since the 
letters issued to Mr. Sides said he would report to the 
State that he would have that information. He told us he 
would give it to us, said he wouldn't later, and so we 
turned to the Attorney General's office and asked them to 
gather the information. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (9161 362-2345 



48 
CHAIRMAN BURTON: According to Chairman Macarro, 

2 somebody gave the information to the A.G. At the time that 

3 you were looking for the information, they had information. 

4 Was it the information, I don't know, but they had 

5 information. 

6 MR. HENSLEY: They did not have all the 
information we needed. They had incomplete information. 

8 CHAIRMAN BURTON: You didn't know that until you 

9 asked them? 

10 MR. HENSLEY: That's correct. 

11 CHAIRMAN BURTON: And you didn't ask them until 

12 after you asked Sides, right? 

13 MR. HENSLEY: That's correct. 

14 CHAIRMAN BURTON: Well, wouldn't it have been more 

15 relevant if you went to the A.G. first and you said, well, 

16 Jesus, this looks like it's a little bit unclear, and you 

17 get into a discussion with the A.G., and as long as they 

18 were the repository of the first reporting thing, you know, 

19 we might — we may or may not be sitting here anyway. But 

20 then the A.G. goes to the CPA and said, look, we need more 

21 of this information. I mean, that doesn't seem like the 

22 reason for the big brouhaha, but I mean — you know, I mean, 
2 3 hindsight's a very cruel thing. That's one thing. But what 
24 besides that? 

2 5 MR. MACARRO: As far as issues? 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 24(). SACRAMENTO. CA 95S27 (916) 362-2345 



49 

CHAIRMAN BURTON: Well, yes. 

MR. MACARRO: I think one of the biggest issues 
that has unfolded over this past year was the May 15 
deadline issue. Prior to one year to put those machine 
licenses into play, and if they didn't, they would have to 
repay to put — to reacquire the same number of licenses for 
yet another year. The money — 

CHAIRMAN BURTON: Repay how much? 

MR. MACARRO: How ever much they paid initially? 

CHAIRMAN BURTON: How much? 

MR. MACARRO: I can't remember. I'm drawing a 
blank. $1,250 per license. 

CHAIRMAN BURTON: Per machine? 

MR. MACARRO: Per machine. 

CHAIRMAN BURTON: Well, as I understand — just 
let me ask this question, I want to get this. I was told by 
some of the tribes who were supporting you that your 
position, that you have told them — let me get this on the 
record. That if they made a good effort towards being 
operational or having the machines by that date, is that 
that was not going to be a firm date, you know, I mean, if 
it just sat in their hands and did nothing. But if it was 
like they did the best they could do and for whatever reason 
they didn't do it, that they were not going to be cut off 
from that date, is that? 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA ^5827 . (916) 362-2345 



50 

MR. HENSLEY: That's true. 

2 CHAIRMAN BURTON: So that is true? 

3 MR. MACARRO: And see the problem with that is 

4 that that's essentially a negotiation or renegotiation of 

5 the wordage of the compact because that money that would 

6 have to be repaid by those tribes — 

7 CHAIRMAN BURTON: He says they wouldn't have to 

8 repay it. 

9 MR. MACARRO: The language of the compact 

10 requires, the actual compact. Never — it doesn't mind what 

11 the candidate for — the chairman of the Commission says, 

12 I'm saying the compact language says that if you don't put 

13 those into play, then you got to pay again. And that's 

14 where the nongaming tribes money comes from. So any 

15 decision that says you don't have to pay — 

16 CHAIRMAN BURTON: Well, I think the nongaming 

17 tribes' money comes from all those hundred dollar bills I 

18 see put in the slots at the casinos, I mean, not so much 

19 this stuff. 

20 MR. MACARRO: That's the beginning of the food 

21 chain right there. 

22 CHAIRMAN BURTON: Well, but I understand that. 

23 But I mean, I would think — I mean to me, here is one 

24 argument — and I'm trying to understand it. One argument 

25 is that you have the May 15th deadline and then they've got 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA S>5S27 ' (916) 362-2345 



51 
to start over and they've got to pay more money, and that's 
not right. And the other thing is that being flexible in 
saying uHSl xx yon ma<^e your uGS^. Sj-ioru Suu Lnrciiyn no 
fault of your own you haven't made the May 15th deadline, 
we're going to allow you to proceed. And then to say but 
then that takes money out of the deal, I mean — 

MR. MACARRO: No, that's precisely the 
consequence. 

CHAIRMAN BURTON: Well, I know the consequence, 
but I mean you're just — you're acting like you're going to 
be upset with him on the May 15th thing if they held people 
to it. 

MR. MACARRO: We wanted him to — actually, we 
wanted him to not have a say in the May 15th deal. That's a 
usurpation by the way of a role that I think belonged to the 
tribes . 

CHAIRMAN BURTON: If you've got a tribe that's on 
the way to getting their slots and through no fault of their 
own there's a strike at the slot machine factory in Jersey 
or something, they don't get their slots, and so this guy, 
usurpation or not, is willing to say, you know, you've got 
an extension because it was through no fault of your own 
that you didn't make it, or would you rather say, hey, you 
know, tough cookies and you have to start over again. I 
would think you would be more — even if you don't like what 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA yf827 .' (916) 362-2345 



52 
he's doing or the fact that he doesn't do it, that the 

2 tribes are getting a shot because they got screwed by 

3 something that wasn't their fault. 

4 MR. MACARRO: Well, in many cases a lot of those 
issues were part of the tribes control. It had to do with a 

6 third party, largely their investors. The money — the fact 
is that the money for the nongaming tribes in the revenue 

8 sharing trust fund comes from the payment of those license 

9 fees. 

10 CHAIRMAN BURTON: It doesn't come from the profits 

11 of the casino? 

12 MR. MACARRO: Well, obviously, we have to open our 

13 doors, people have to come in and put dollars in our 

14 machines, and then we have to turn around and pay for 

15 licenses. Those dollars paid for the license for each 

16 machine, or they accumulate and in the aggregate become the 

17 revenue sharing trust fund. That's where the nongaming 

18 tribes get their moneys. So any hold up on this end saying 

19 hey tribes you have a ten-month extension, is a ten-month 

2 hold up on the nongaming tribes getting their dollars, and 

21 that's been one of the major problems that we've had over 

22 the last year. 

23 CHAIRMAN BURTON: So the tribes get no money out 

24 of the profits of the big casinos? 

25 MR. MACARRO: As long as the tribes that have 



PETERS SHORTHAND REPORTING CORPORATION 

5336 BRADSHAW ROAD. SUITE 241). SACRAMENTO. CA 95S27 (916) 362-2345 






53 
licenses in their hand don't have to repay it, that one-year 
deadline. 

CHAIRMAN BURTON: In other words like, I've been 
in the casinos since the slots, I haven't visited yours yet, 
but they're doing pretty good, at least they're going, you 
know, with hundred dollar slots, which I never saw before. 

MR. MACARRO: Oh, where ' d you go? 

CHAIRMAN BURTON: Where else, Richmond. Anyway — 
and a couple others. But basically, that none of that 
profit or proceeds go into the trust fund for nongaming, 
it ' s only the license renewal money? 

MR. MACARRO: Right. 

CHAIRMAN BURTON: All right. 

MR. MACARRO: Or the initial license acquisition. 

CHAIRMAN BURTON: The license acquisition. Your 
concern, because I'm trying to understand Mark. You're 
concerned with what he's doing is by granting an extension, 
whatever, is that that will be costing renewal money or 
something else because you pay a license fee every year. 

MR. MACARRO: Yes. 

CHAIRMAN BURTON: Okay. So basically they would 
have paid the license this year and then they'd be paying a 
license next year, and because he's renewing it, it probably 
— the next year's license gets shoved forward? 

MR. MACARRO: Or saying if you don't have to pay 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



54 

1 it, you know. 

2 CHAIRMAN BURTON: Don't have to pay a new license 

3 on machines ycu ain't got? 

4 MR. MACARRO: That's money that's not going into 

5 the kitty for the nongaming tribes. 

6 CHAIRMAN BURTON: Not paying on slots you ain't 

7 got? 

8 MR. MAC- RO: Well, right. You've got — right. 

9 I guess the problem on that side is you've paid for a 

10 license but you don't have a slot to put into operation, 

11 because you don't have a building or you have some 

12 environmental issues or whatever, it hasn't been put in a 

13 row yet for you to open up. 

14 CHAIRMAN BURTON: Well, then is it right that they 

15 have to pay for the slots? Here's the question I have about 

16 this. Is it right that they have to pay for the — they 

17 have to buy a license for something that they haven't got 

18 and may not get, because whether it's environmental — I'm 

19 asking from the State's standpoint. 

2 MR. HENSLEY: Well, we believe that the license 

21 process is set in stone in the compact. It's $1,250 for the 

22 initial license, then it's a quarterly payment for those 

23 machines in operation. 

24 CHAIRMAN BURTON: A quarterly payment of? 

2 5 MR. HENSLEY: Of a certain amount based on the 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 ,' (916) 362-2345 



.55 

number of machines, so it's a sliding scale. 

CHAIRMAN BURTON: Based on the machines, not based 
on uj.j.e rsuusrin^ j.rom eacn machine. 

MR. HENSLEY: That's correct, it's a flat fee. 
There's a second fund, Mr. Chairman. 

CHAIRMAN BURTON: Well, I — go ahead. 

MR. HENSLEY: Which is based upon the average 
daily net win of a certain number of machines, which were 
those machines in operation in September of '99, and that 
money will go to the Legislature for mitigation and offset 
purposes. That doesn't start for another year and a half. 

CHAIRMAN BURTON: The machines in September 19 99? 

MR. HENSLEY: Yes. There were 19,00 machines — 

CHAIRMAN BURTON: Was that bogus machines or the 
real slot machines? 

MR. HENSLEY: Yeah, it was the number of machines. 
It's the old machines. 

CHAIRMAN BURTON: Actually before the compact? 

MR. HENSLEY: It's the old machines. Yes, pre- 
compact machines . 

CHAIRMAN BURTON: Okay. 

MR. MACARRO: I think this is such a core issue 
here to what the problems have been. I think that this 
willingness to use tribal issues and pit nongaming tribes 
and us so-called hardliner tribes against each other by 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



56 

1 holding up the disbursement of monies for which we see no 

2 excuse and no interpretation, we think it's one of the brief 
moments of absolute clarity in the compact, that on a 

4 quarterly basis everything that's in the trust fund should 

5 be distributed. Yet, here a year later, the Commission is 

6 yet to distribute everything that's in there. And that has 
been under the helm and leadership and direction of the 

8 current interim chairman. 

9 One of the big problems we have is this 

10 interpretation, willingness to interpret unilaterally on 

11 behalf of the State otherwise language that is in that 

12 compact. And I think that it's something that really needs 

13 to have you folks, Members of the Committee, raising 

14 questions and asking why is it or how is it that this one 

15 agency of this state can have such a strong role in 

16 interpreting the language of basically a government-to- 

17 government treaty. 

18 Now, if this is allowed to stand, I think that 

19 truly the last three, four years of groundwork, state to 

2 state — or State to Tribal Nation relationships will begin 

21 to erode. That's already forced us to invoke Section 9, a 

22 dispute resolution clause that's in the compact, which is 

23 really the proper arena for which interpretations should be 
2 4 made . 

25 SENATOR KARNETTE : I have a question. I have a 



PETERS SHORTHAND REPORTING CORPORATION 

5336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



57 
question. 

SENATOR JOHNSON: Senator Karnette. 

SENATOR KARNETTE: When you talk about dispute 
resolutions, so if this goes the way you feel it should, 
will it prevent the tribes from getting your money? I mean 
the money will not be distributed, will it, if it goes to 
court? 

MR. MACARRO: No. No. 

SENATOR KARNETTE: It will be distributed? 

MR. MACARRO: It will be distributed. In fact, 
the Commission has the power right now to go ahead and 
distribute, and I'm saying they should have been 
distributing from the end of the first quarter. 

SENATOR KARNETTE: But if they disagree for 
whatever reason, couldn't this interrupt the distribution 
for even a longer period of time? 

MR. MACARRO: No, you've asked — if this goes the 
way that I would like to see it go and that would be that 
Mr. Hensley doesn't get confirmed, there's still three 
members of the Commission that are active, that's a quorum 
of the Commission. They can still engage in duties. 

SENATOR KARNETTE: But you're not sure they would 
do that, are you? 

MR. MACARRO: I feel pretty confident that they 
will. I feel eventually that even under the chairmanship of 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE :4(). SACRAMENTO. CA 95827 / (916) 362-2345 



58 

1 Mr. Hensley that they would get to disbursing most 

2 everything that's in that trust fund. But why there even 
has to be over a year's waiting time is beyond me, when the 

4 language of the compact is pretty clear on how that money 

5 does get distributed and when. 

6 SENATOR KARNETTE: I understand your concern. I 
sit on a governmental organization and I've been involved, 
not like Mr. Burton, but I've heard this from the very 

9 beginning and it's a very, very complicated issue. It's 

10 something we've never done before, it's new for the State, 

11 and it's new for us. And knowing what happens in all other 

12 agencies and groups, there's always problems and coming to 

13 consensus is very, very difficult, and I'm sure we make a 

14 lot of mistakes along the way. 

15 But I can't see — I mean I'm not sure exactly 

16 what should have been done. You wanted the money 

17 distributed, but maybe others, if that had happened, maybe 

18 there would have been other conflicts. Now, you can tell me 

19 what that says all you want, I'm not a lawyer, I'm 

20 interested in fairness. I'm a teacher first, last, and 

21 always, and when my lawyer friends tell me that you can't do 

22 this, I say laws are made for people, not people for laws, 

23 and I really feel like there are times when you have to use 

24 some common sense. I don't know that I could resolve this, 

25 but it's something that takes — it has to be resolved 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



59 
sooner or later, and I don't want anybody to suffer, but I 
want it to be fair, and I can't see how not confirming Mr. 
Kensley when really he wasn't the one. Wasn't it the CEO 
who was making these decisions? 

MR. MACARRO: The CEO, the interim executive 
director? 

SENATOR KARNETTE: Yes, wasn't he making the 
decisions? 

MR. MACARRO: I don't know. I've heard him say he 
was kind of a rogue element in there, but even that's a 
problem, because if you don't have control of your staff. 

SENATOR KARNETTE: But human nature is human 
nature, and part of human nature in the democratic process, 
and this has always happened, and ultimately we have to come 
to some kind of resolution. And I want a resolution to come 
about, I want it to be as fair to everybody as possible, but 
I think we're in a learning curve here and I just can't see 
how holding up this confirmation is going to solve anything. 
But I think he ' s probably learning something from it and 
would hope all the others would too. And I don't know what 
the answer is , but it ' s not going to prevent me for voting 
for his confirmation, not because you're not right, maybe, 
but I don't see how it solves anything. The compact can say 
whatever the compact says. There have been so many 
disagreements already that I am very confused about what ' s 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



60 
in the compact and what isn't and what's right and what's 

2 wrong. I don't think there are any absolutes. 

3 MR. MACARRO: Well, that goes to the essence of 

4 how you started what you just said. When there are 

5 disputes, who gets to decide which interpretation is 

6 correct? For the better part of this year — 

7 SENATOR KARNETTE : The majority, usually, just 

8 like on the Supreme Court. 

9 MR. MACARRO: Well, okay. In this case you're 

10 essentially agreeing with the notion that the Commission 

11 under Hens ley ought to go ahead and usurp whatever tribal 

12 sovereignty is inherent in the fairness of these compact 

13 agreements. 

14 SENATOR KARNETTE: Well, but see the fairness is 

15 in the mind of the person who's speaking. It seems to me 

16 like everybody's trying to be fair. You are, I know, and I 

17 feel like Mr. Hens ley is too. Now, maybe he made some 

18 errors, and I know Mr. Burton tries to be fair, I mean he's 

19 been working on this for a long time. Mr. Johnson tries to 

20 be fair, we may not always agree what fairness is though, 

21 but I think we try, and I know I do. But I just can't see 

22 holding up everything because of this. 

23 MR. MACARRO: I'm not advocating holding 

2 4 everything up. My position is that with a different person 

2 5 at the chair of this commission, somebody who has more 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 ' (916) 362-2345 



61 

consensus building rather than a czar mentality, I think 
that this would work out better, at least in light of what 
the intentions were. 

Any more questions? 

SENATOR JOHNSON: My practice here is to vote in 
favor of every nominee that comes before us, but I do think 
that when you have a significant factor to be considered in 
terms of the gaming tribes in California come before us and 
a very respected leader comes before us and says please 
don't confirm this gentleman, and to see that kind of 
division, and I do believe that there needs to be that kind 
of consensus building. And contrary to Senator Karnette, I 
cannot support your nomination at this, point for that 
reason. I think that just the fact that there is this 
history of an inability for whatever reason and whoever ' s at 
fault to work together, that does not bode well for the 
future . 

MR. MACARRO: No, it doesn't based on one year's 
activity. If this is a harbinger of what's to come, then we 
are in for more divisiveness . 

CHAIRMAN BURTON: Can I ask a question, where are 
the other tribes that are in opposition? 

MR. MACARRO: I don't know. I'm the Chair of my 
tribe. 

CHAIRMAN BURTON: I understand. I was just saying 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



62 

that to Senator Johnson. 

2 MR. MACARRO: I have a not so kind answer on that. 

3 CHAIRMAN BURTON: Okay. Take a shot. 

4 MR. MACARRO: I think essentially Mr. Hensley has 
told them things they want to hear and they've been placated 

6 by that. And frankly, that's the way things have been 
working. Pick off a group here, pick off a group there, 

8 very Pete Wilsoness tactics. 

9 CHAIRMAN BURTON: Well, I don't see — 

10 SENATOR JOHNSON: Well, Pete Wilson is a friend of 

11 mine. 

12 CHAIRMAN BURTON: And believe me, he's no Pete 

13 Wilson. 

14 (Laughter. ) 

15 MR. MACARRO: And it worked very well at one time. 

16 CHAIRMAN BURTON: Well, I understand your point of 

17 view. You know, I've never considered Pechanga anything 

18 but a, quote, "hardline tribe," to say the least. No. I 

19 mean, they worked hard enough to get two casinos. I mean he 

20 was sticking out when everybody was coming in. 

21 MR. MACARRO: Right. 

22 CHAIRMAN BURTON: You know, I don't see some of 

23 the other ones. And my feeling is that I've heard from 

24 several of the gaming tribes, some are the wannabes, but 

25 some of them were established when you were prior to the 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95S27 . (916) 362-2345 



63 
policy and everything else, and you know, on that basis, you 
know, I differ with Senator Johnson. If there were like 13 
tribes for and nine tribes against, you know, with serious 
questions, to me that would be a pretty good split. I think 
the fact that one tribe that's a respected tribe, and you're 
— you know, clearly you've been a leader in the whole 
gaming thing, have a problem which would mean that again I'm 
missing the thing like is it better to give these nongaming 
tribes a shot by an extension and be criticized for that, or 
be criticized for saying, you know, we're cutting them off 
at May 15th, and I mean, I'm still not sure we're — 

MR. MACARRO: I don't think you can provide a 
value judgment to that because you can be in favor or 
against that, but the fact is we agreed to those terms, even 
the tribes who were going to be so-called penalized by 
having to repay again for licenses they still had to put 
into play but didn't, we all agreed to those terms. 

CHAIRMAN BURTON: Did the tribes agree to the 
terms that the CPA's were supposed to send — 

MR. MACARRO: Yes. 

CHAIRMAN BURTON: — the stuff into the State and 
they didn't do it? 

MR. MACARRO: There were 61 agreements, 60 
agreements . 

CHAIRMAN BURTON: But the accountants didn't make 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 , (916) 362-2345 



64 

the information available to the State? 

2 MR. MACARRO: The State didn't have a relationship 

3 with the trustee. 

4 CHAIRMAN BURTON: Well, didn't they agree — were 
they, Mark, really trustees or CPAs? I mean, they aren't 

6 holding your money in trust are they? 

MR. MACARRO: Well, we can go over that, but there 

8 was a legal relationship that — 

9 CHAIRMAN BURTON: Yeah, you hired them. But 

10 wasn't it part of the compact agreement to make that 

11 available, or was it, I don't know. 

12 MR. MACARRO: No. Essentially no. 

13 CHAIRMAN BURTON: May I say this that I know 

14 you'll strongly disagree with. But see had Paula come into 

15 play, had Prop 5 not passed you know. 

16 SENATOR JOHNSON: All sad words of tongue and 

17 heaven. 

18 CHAIRMAN BURTON: The saddest are these. 

19 SENATOR JOHNSON: It might have been. 

20 . CHAIRMAN BURTON: Thank you, Mark. 

21 Would you like to respond, please? 

22 MR. HENSLEY: Well, the only thing I would say, 

23 Senator, is some of the characterizations weren't adequate 

24 in terms of the accuracy or the quotes. I think were 

25 referred to as hardline with the existing tribes. I've 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



65 
attempted to meet with Mr. Macarro on several occasions and 
hold out that at any time I'll be glad to go to Pechanga and 
meet with Chairman Macarro at any time on any issue. We're 
in a meet and confer now. There is a process — 

CHAIRMAN BURTON: A meet and confer with whom? 

MR. HENSLEY: With Mr. Macaroo and his tribe, or 
any other tribe. 

CHAIRMAN BURTON: No. You just said you're in a 
meet and confer. 

MR. HENSLEY: Yes. 

CHAIRMAN BURTON: So you're in a meet and confer 
with Mr. Macarro and Pechango, not or any other tribe? 

MR. HENSLEY: Yes. We're with Mr. Macarro and 
Salmon Wells at this particular time. 

CHAIRMAN BURTON: Meeting and conferring? 

MR. HENSLEY: Yes. 

CHAIRMAN BURTON: About what? 

MR. HENSLEY: On a number of issues that they've 
raised. It's their issue, so we're meeting with them to 
discuss those issues and talk about them. 

CHAIRMAN BURTON: And then what happens? 

MR. HENSLEY: We come to the end of the meet and 
confer and then there's a process if we agree, either party 
may go then to court if those issues aren't resolved. We're 
in the resolution and discussion process. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



66 

CHAIRMAN BURTON: What kind of issues have you 

2 discussed with them? 

3 MR. HENSLEY: It's about licensing, some of the 

4 issues that Mr. Maccaro has raised here at the table. 

5 CHAIRMAN BURTON: It's about licensing what, like 

6 whether May 15th can be extended? 

MR. HENSLEY: Yes, sir, that's part of it. 

8 CHAIRMAN BURTON: Part of it is whether the May 

9 15th deadline can be waived if there are good efforts, best 

10 efforts are made as well? 

11 MR. HENSLEY: Yeah. Their position is the State 

12 doesn't have a licensing authority and we're discussing that 

13 and we're discussing the revenue sharing trust fund. 

14 CHAIRMAN BURTON: Well, someone's got the 

15 licensing authority, don't they, because they paid money? 

16 MR. HENSLEY: We believe so. 

17 CHAIRMAN BURTON: Somebody's got licensing 

18 authority. Who, you do? 

19 UNIDENTIFIED SPEAKER: Yes. 

20 CHAIRMAN BURTON: So your position is that you've 

21 got the authority to license yourself? 

22 UNIDENTIFIED SPEAKER: It's part of the 

23 negotiations. It's in the compact. 

24 MR. CURRIO: I figure if you can respond from the 

25 audience, I'd like to also. We were part of the Sides 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95S27 (916) 362-2345 



67 
process. Rincon and many tribes voted to against the Sides 
process, but we lost by a vote. So when we talk back to the 
issue of sovereignty though as mentioned earlier, truly not 
all the compacts were sovereign compacts. Many of us signed 
the compact because we knew if we didn't sign the compact, 
we wouldn't have a compact. 

Rincon Band sat in San Diego for five years as 
other tribes in San Diego were allowed to operate gaming, as 
they could not as well Pechanga open six weeks after. We 
couldn't open our casino. So when we're talking about 
sovereignty, Rincon Band would completely give you a 
different story had we been up there and had the 30 to 40 
minutes to get involved in questions about the compact, the 
interpretations of what went on with the compacting process, 
and the numbers of machines and all the issues. And I think 
I'll make one statement that's the most important one. 
Regardless of who sits in that commission chair or 
commission, if they take a position on one issue, they're 
going to be wrong to another tribe or many other tribes . 
That ' s why I made my statements about the ambiguities of the 
compact. John Hens ley nor anybody else sitting on this 
commission could be blamed for how badly the compact was 
written. You can't blame a man for something he doesn't 
have control over. Whoever sits in this position is going 
to have to make the best — attempt to make the best 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



68 
1 interpretation. 

And other tribes who were affected by the negative 

interpretation will have to work through the processes in 
4 the compact to decide legally through law what those 

interpretations are. And for the record, Rincon has also 
6 caused -- initiated a meet-and-conf er process amongst many 

other tribes to protect our interests to make sure that our 

compact is given its sovereign right as any other tribe is. 
9 And there are a lot of different issues. 

10 And when we talk about fairness, I think this is 

11 the most important point. There can never be fairnesses in 

12 the compact, because tribes who are in gaming, who have a 

13 certain amount of machines, only had to pay for licenses 

14 that they got beyond what was grandfathered in. So the 

15 amount they paid for the 1,250 times amount — say if it's 

16 7 00 licenses, they paid 840,000 roughly. They didn't have 

17 to pay the $2,062,250 that Rincon did. That's just one 

18 difference, and there's probably ten or more differences 

19 easily in that contract that are ambiguous and different. 

20 So there will never be fairnesses in that 

21 contract. There will only be the best effort and 

22 interpretation and then what doesn't work for tribes, people 

23 will have to litigate. So in all fairness to Hensley and 

24 his commission, it is not their fault that they have to deal 
2 5 with the unfair and ambiguous contract. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



69 

And I've seen many times when I went to hearings 
where some of the — where tribes were trying to stop the 
Commission from getting their budget. I mean, I know you 
guys in the Senate and Legislature know that the tribes were 
resisting the budget for the Commission also. Assume some 
of the same tribes were a tribe that's complaining about the 
Commission hasn't done their job, well you have got to give 
money. To resist everything they try to do, they can't 
accomplish anything. 

I can talk two hours about this, but I think 
that's enough. It's not Hens ley's fault nor the 
Commission's fault that there's things that are unclear in 
the contract. We as leaders and tribes will have to work 
through the processes and costly litigation, if need be, to 
work those things out. And then in a year and a half from 
now when we renegotiate, hopefully we can all work out a 
more favorable process. But the problem happened when Judge 
Norris left the Sacramento negotiations on the Tuesday after 
they started, went across the street to the Capitol Building 
and didn't come back for two weeks. Now, what ever happened 
across the street? 

Now we as a tribe sovereign didn ' t have a right to 
really participate in negotiations. Not only were we a 
tribe there, but I was appointed one of the four leaders to 
be part of the negotiation structured for all the tribes . 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 .' (916) 362-2345 



70 
So I clearly know what happened. I clearly — at least — 

2 I don't know why these things that happened across the 

3 street at the 11th hour, there are things that we don't know 

4 what happened. 

5 But there are a lot of things we do know that 

6 happened, which was our interest was not allowed to be 
lobbied, because the negotiations didn't stay at the table 

8 as they should have. And there should have been enough 

9 time, whether it be six months or three months or whatever 

10 to negotiate a fair contract that could have worked out all 

11 these issues, instead of trying to force them into two and a 

12 half weeks. 

13 CHAIRMAN BURTON: Well, the problem that brought 

14 that about was the administration really didn't do anything, 

15 and then they were forced with a new Prop 5, and there was 

16 like about, I don't know, four days notice. 

17 Let me ask one question before we go to the vote. 

18 So the licensing fee for the gaming tribes who were into 

19 gaming prior, only applies to additional slot machines and 

20 not like if they had a thousand slot machines and only got a 

21 thousand, two thousand, you only pay a licensing fee on the 

22 second thousand and not the first thousand. 

2 3 MR. MACARRO: Right. Let's say you had 1,650 

24 licenses, 1,650 machines — 

25 CHAIRMAN BURTON: I'm asking him a question. 



PETERS SHORTHAND REPORTING CORPORATION 

333ft BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA V5S27 / (916) 362-2345 



71 

MR. MACARRO: Oh. 

CHAIRMAN BURTON: If I ain't happy, I'll let you 
get to it, Mark. Yes or no? 

MR. HENSLEY: The answer is yes and they pay at 
the lower rate because there's an explanation, so they pay 
at the rate as though it were the first thousand, that's 
correct. 

CHAIRMAN BURTON: Find out who negotiated those 
contracts for the State and tell them not to come looking to 
me looking for a job. 

SENATOR JOHNSON: They're buying electricity now, 
Mr. Chairman. 

(Laughter. ) 

CHAIRMAN BURTON: Call the roll. 

MS. WEBB: Senator Karnette. 

SENATOR KARNETTE: Aye. 

MS. WEBB: Karnette Aye. Senator Knight. Senator 



Romero . 



SENATOR ROMERO: Aye. 

MS. WEBB: Romero Aye. Senator Johnson. 

SENATOR JOHNSON: Abstain. 

MS. WEBB: Abstain. Senator Burton. 

CHAIRMAN BURTON: Aye. 

MS. WEBB: Burton Aye. Three to zero. 

CHAIRMAN BURTON: Congratulations. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



72 

1 Next Michael Palmer. 

2 Kow about bringing up J.K. Sasaki and Arlo Smith 

3 all at the same time. 

4 SENATOR JOHNSON: Mr. Chairman, I do have some 

5 separate questions . 

6 CHAIRMAN BURTON: Okay. Well, we'll go ahead 
then. We can ask them separate anyway. Or however you want 

8 to do it. 

9 SENATOR JOHNSON: Yes, I intend to ask the same 

10 series of questions I've asked each of the other nominees 

11 but there's a different element with respect to Mr. Palmer, 

12 who I understand did not file his Statement of Economic 

13 Interest until five months late, or six months after his 

14 appointment. 

15 Can you comment on that and why it was not filed 

16 in a timely fashion. 

17 MR. PALMER: Senator, I was informed by legal 

18 counsel with the Division in our staff that it was due 

19 within 30 days of our adoption of our Conflict of Interest 
2 Code and for the FPPC code, so it was requested as part of 

21 the Senate confirmation. However, I informed them that it 

22 was not due and I had wanted to wait until we had the code 

23 adopted to make sure I did it properly. They had initially 

24 no problem with that. When they did need it, I did file it, 
2 5 even though the code had not been adopted. And when it was 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95327 / (916) 362-2345 



73 
adopted, I filed another one within 30 days as required. 

SENATOR JOHNSON: The same question that I asked 
earlier nominees . Were you at any time given any advice 
from the Governor's office about what the requirements, both 
the letter and the spirit of the law and disclosures and 
what might constitute potential conflicts of interest? Were 
you given any training or advice, admonishment, anything 
from the Governor's office with respect to that? And I'd 
like the other two to comment on that as well. 

MR. PALMER: Okay. Well, let me go first. I had 
extensive conversations with Michael Numaki, the appointment 
secretary on what we were required to do for this 
appointment. I was also given — 

SENATOR JOHNSON: Was this prior to your receiving 
the appointment? 

MR. PALMER: Prior to receiving. And then — 

SENATOR JOHNSON: So more than six months ago? 

MR. PALMER: That's correct. And then 
subsequently, the Division of Gambling Control provided us 
with a binder with all the statutes that — copies of the 
compacts, Gambling Control Act, all the court cases, in fact 
two volumes, to read. That was provided by Harlan Goodson, 
which we did, and they also provided us with Bagley Keene 
film or tape which we — 

CHAIRMAN BURTON: Well, hold on. Bagley Keene ' s 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE :-H). SACRAMENTO. CA 95827 / (916) 362-2345 



74 

1 like open meetings isn't it? 

2 MR. PALMER: Uh-huh. 

3 CHAIRMAN BURTON: So I mean what he's talking 

4 about is what do we call that, the Statement of Economic 

5 Interest? 

6 SENATOR JOHNSON: Statement of Economic Interest 
and the Potential for — and look, let me just be — I 

B thought I was earlier, but let me just again — 

9 CHAIRMAN BURTON: Let me guess, it's not aimed at 

10 anyone individually. 

11 SENATOR JOHNSON: It's not, but we have clearly 

12 had questions arise about persons that we have already as a 

13 Committee and as the Senate confirmed, who have been 

14 appointed, or in some instances reappointed, and then 

15 questions have arisen as to potential conflict of interest. 

16 And just to put an exclamation point behind it, that has the 

17 potentiality to be plain damn embarrassing. Why didn't you 

18 ask the questions, Senator Johnson? So Senator Johnson 

19 intends to ask the questions, and end up with some certainty 
2 what exactly the Governor's office's approach on these kind 

21 of issues has been. But it seems to me, again, to put it 

22 very bluntly that so far this administration has been 

23 somewhat ethically tone deaf about conflict of interest, not 

24 only the letter of the law but the spirit that underlines 
2 5 that law. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 05827 ,' (916) 362-2345 



75 

CHAIRMAN BURTON: Let's stick with — all right. 
So basically you were late. What's the latest, as soon as 
you get appointed, you have 30 days? 

SENATOR JOHNSON: Thirty days normally. 

CHAIRMAN BURTON: Okay. So you were late in 
filling out the form and putting it in because who said that 
was all right? 

MR. PALMER: Well, we were a new commission, there 
were no conflict of interest codes. 

CHAIRMAN BURTON: Well, you have this law of the 
State of California. 

SENATOR KNIGHT: That's right. 

MR. PALMER: Well, I was advised by counsel 
that — 

CHAIRMAN BURTON: Who, what counsel? 

MR. PALMER: Rene — 

CHAIRMAN BURTON: No, but I mean which counsel for 
whom or what? 

MR. PALMER: She was acting counsel for the 
Commission at the time. 

SENATOR JOHNSON: Can I ask on that point, why did 
the other commissioners file their statements in a timely 
fashion? Weren't they receiving the same advice from the 
same people? 

Do you care take a crack on it? Did you file 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95S27 (916)362-2345 



76 

1 within 30 days? 

2 MR. SMITH: Oh, yes, I filed. In answer to your 
question, my recollection is that when the Governor — we 

4 received the information from the Governor on the 

appointments, it included a Form 700, with a reference to 

6 the Fair Political Practices Commission and suggested we 
contact them, which I did. I know and some of the other 
commissioners and I believe Mr. Palmer also, and they 

9 stressed a tape about the filing which we listened to. 

10 SENATOR JOHNSON: In the nature of an ethics 

11 training course; is that correct? 

12 MR. SMITH: Yes, that's correct. And in the 

13 course of my earlier private — public career, I filed a 

14 number of these as well. I filed it and then I refiled 

15 again shortly within — before this here, in the last month. 

16 MS. SASAKI: Yes, I also did the same as 

17 Commissioner Smith. In fact, Commissioner Smith and I 

18 viewed the conflict of interest video tape together and 

19 signed up with our staff member, Alisa King, so she can show 
2 we actually did it. 

21 SENATOR JOHNSON: They had a record that you 

22 actually sat and watched the tape? 

23 MS. SASAKI: Yes. That we actually watched the 

24 tape. 

25 SENATOR JOHNSON: And this happened within the 30 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 , (916) 362-2345 



77 
days? 

MS. SASAKI: It happened, I don't know if it was 
in the 3 days or not. 

MR. SMITH: Shortly thereafter. 

MS. SASAKI: But then I filed it with — when 
Nettie Sabelhaus asked for all our disclosures, and then we 
filed it again once our Conflicts of Interest Code was 
adopted. 

SENATOR JOHNSON: So apparently neither of you got 
the same advice that Mr. Palmer did? 

MR. SMITH: I don't know. 

SENATOR JOHNSON: Okay. Then the final question, 
Mr. Chairman, and then I'll stop these. Just, I'm going to 
ask this of everybody for a while that comes before us on a 
confirmation is, what is your sense, not only of the legal 
requirements, but of the moral and ethical requirements for 
you to disclose potential conflict of interest? 

MR. PALMER: Well, I think it's — it's important, 
especially as a member of the Commission that we disclose 
any conflict that we may have, and there's specific 
conflicts that are enumerated and again we were told that, 
that we were sworn to avoid. 

MR. SMITH: It's my view that we better be very, 
very careful to avoid any conflict or even appearance of 
conflict, because if we are to have the confidence of the 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



78 

public, particularly in this highly sensitive industry, if 
2 the public is to have confidence, and the players to have 

confidence, and there's to be indeed a protection of the 
4 clubs themselves, we've got to have a situation where 

there's absolutely no doubt that there's no conflicts or 
6 potential conflicts existing between the commissioners who 

have certain authorities and the card clubs in certain 

8 roles. So I think it's something you've got to look at very 

9 carefully and be very strict on yourself. 

10 MS. SASAKI: Yes, I agree with Commissioner Smith, 

11 you definitely have to be above board, and even — just no 

12 conflicts at all with respect to any types of interests of 

13 our constituents or anything. 

14 SENATOR JOHNSON: Neither the conflict or the 

15 potential perception? 

16 MS. SASAKI: Yeah, or perception too. You should 

17 have the perception. 

18 SENATOR JOHNSON: Mr. Chairman, I appreciate your 

19 allowing me the time to raise these issues. I mean, we've 
2 seen in recent weeks appointees who have proclaimed 

21 ignorance of the requirements to disclose and have offered 

22 in my opinion less than satisfactory defenses of what seem 
2 3 on the face to be definite conflicts, so I intend to ask 

24 these questions. I thank you. 

25 CHAIRMAN BURTON: Mr. Palmer, most of your stuff 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 24(). SACRAMENTO. CA 45827 / (916) 362-2345 



79 
says you like real estate or supermarket investments, stuff 
like that? 

MR. PALMER: That's correct. 

CHAIRMAN BURTON: And none of your investments — 
you took a quick look at Tropicana but decided that was real 
property, not the casino? 

MR. PALMER: It just happens to be on that street. 

CHAIRMAN BURTON: Oh, is it? 

MR. PALMER: Yes. 

CHAIRMAN BURTON: Senator Romero? 

SENATOR ROMERO: No questions. 

CHAIRMAN BURTON: Senator Knight? 

SENATOR KNIGHT: Yes, one question of Mr. Palmer. 
Is this your first government appointment? 

MR. PALMER: Yes, sir. 

SENATOR KNIGHT: And you've had no dealings with 
the government in the past at all? 

MR. PALMER: No, I have not, Mr. Senator. 

SENATOR KNIGHT: Thank you. 

CHAIRMAN BURTON: Senator Karnette? 

SENATOR KARNETTE: I don't have a question, but I 
knew his mother. And anybody who grew up with his mother, 
she was the worse sixth-grade teacher, the kids were scared 
to death, and I taught next door to her. He's got to be 
okay. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95S27 (916)362-2345 



80 



1 
2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 



(Laughter. ) 

SENATOR JOHNSON: Maybe she should have done the 



video. 

SENATOR KARNETTE 
something if you had her. 

CHAIRMAN BURTON: 



Listen, you would have learned 



All right. I believe all of the 
witnesses that testified were witnesses either in support or 
in opposition. Chairman Macarro said he had no problem. 

Would it be easier, do you want to separate or 
anything or do them both? 

I'll move the nominations as a group. Secretary, 
call the role. 

MS. WEBB: Senator Karnette. 

SENATOR KARNETTE: Aye. 

MS. WEBB: Karnette Aye. Senator Knight. 

SENATOR KNIGHT: Aye. 

MS. WEBB: Knight Aye. Senator Romero. 

SENATOR ROMERO: Aye 

MS. WEBB: Romero Aye. Senator Johnson. 

SENATOR JOHNSON: Aye. 

MS. WEBB: Johnson Aye. Senator Burton. 

CHAIRMAN BURTON: Aye. 

Thank you. Congratulations. 
(Thereupon this portion of the Senate Rules Committee 
hearing was terminated at approximately 4:45 p.m.) 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



81 
CERTIFICATE OF SHORTHAND REPORTER 

I, MICHAEL J. MAC IVER, a Shorthand Reporter, do 
hereby certify that I am a disinterested person herein; that 
I reported the foregoing Senate Rules Committee proceedings 
in shorthand writing; that I thereafter caused my shorthand 
writing to be transcribed into typewriting. 

I further certify that I am not of counsel or 
attorney for any of the parties to said Senate Rules 
Committee proceedings, or in any way interested in the 
outcome of said Senate Rules Committee proceedings. 

IN WITNESS WHEREOF, I have hereunto set my hand 
this 13th day of September 2 001. 




Shorthand Reporter 



PETERS SHORTHAND REPORTING CORPORATION 

333d BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 ,' (916) 362-2345 



437-R 
Additional copies of this publication may be purchased for $3.50 per copy 
(includes shipping and handling) plus current California sales tax. 

Senate Publications 

1020 N Street, Room B-53 

Sacramento, CA 95814 

(916)327-2155 

Make checks payable to SENATE RULES COMMITTEE. 
Please include Stock Number 437-R when ordering. 



u 3 " " 

ill 

tool 






^ HEARING 

SENATE RULES COMMITTEE 

STATE OF CALIFORNIA 




DOCUMENTS DEPT. 

OCT 2 9 2001 

SAN FRANCISCO 
PUBLIC LIBRARY 



STATE CAPITOL 

ROOM 3191 

SACRAMENTO, CALIFORNIA 

MONDAY, AUGUST 27, 2001 
3:30 P.M. 



439-R 



SENATE RULES COMMITTEE 
STATE OF CALIFORNIA 



HEARING 



STATE CAPITOL 
SACRAMENTO, CALIFORNIA 



MONDAY, AUGUST 27, 2001 
3:30 P.M. 



OPIPIMAI 



Reported by: 

Michael Mac Iver, Shorthand Reporter 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



11 
APPEARANCES 
MEMBERS PRESENT 
SENATOR JOHN BURTON, Chair 
SENATOR ROSS JOHNSON, Vice Chair 
SENATOR BETTY KARNETTE 
SENATOR WILLIAM KNIGHT 
SENATOR GLORIA ROMERO 

STAFF PRESENT 
GREG SCHMIDT, Executive Officer 
PAT WEBB, Committee Secretary 

NETTIE SABELHAUS, Consultant on Governor's Appointments 
SUSIE SWATT, Consultant to SENATOR JOHNSON 
TIM SHELLEY, Consultant to SENATOR KARNETTE 
CHRIS BURNS, Consultant to SENATOR KNIGHT 
RYAN SHERMAN, Consultant to SENATOR ROMERO 

ALSO PRESENT 
ASSEMBLYMAN DICK DICKERSON 
JAN KRAEPELIEN, Freshwater Residents 
WILLIAM BERTAIN, Attorney for Elk River Residents 
KRISTI WRIGLEY, Elk River Resident 
DAN MACON, Private Citizen 
SENATOR JACKIE SPEIER 

BILL ALLAYAUD, Sierra Club California 
ARTHUR FEINSTEIN, Golden Gate Audubon Society 
LENNIE ROBERTS, Committee for Green Foothills 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



Ill 
INDEX 

Page 
Proceedings 1 

Governor ' s Appointees : 

WILLIAM A. HOY, Member 

California Regional Water Quality Control 

Board, North Coast Region , 1 

Introduction by ASSEMBLYMAN DICK DICKERSON 1 

Background and Experience 2 

Witnesses in Opposition; 

JAN KRAEPELIEN 

Freshwater Residents 3 

WILLIAM G. BERTAIN 

Attorney for Elk River Residents 10 

KRISTI WRIGLEY 

Elk River Resident . 15 

Questions by SENATOR ROMERO re: 

What Actions Have Been Taken In Response 

to the Decline in Enforcement Actions 21 

Under What Circumstances Would 

Enforcement Actions Be Taken 22 

Motion to Confirm 23 

DINA J. MOORE, Member 

California Regional Water Quality Control 

Board, North Coast Region 23 

Witness; 

DAN MACON 

Private Citizen 26 

Motion to Confirm 27 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



IV 



Question by SENATOR ROMERO re: 

What is Conflict of Interest and What 

Steps to Take to Avoid it 28 

Committee Action 29 

WILLIAM J. SCHUMACHER, Member 

California Regional Water Quality Control 

Board , San Francisco Bay Region 30 

Introduction by SENATOR JACKIE SPEIER 31 

Witnesses in Opposition: 

BILL ALLAY AUD 

Sierra Club California 32 

ARTHUR FEINSTEIN 

Golden Gate Audubon Society 33 

LENNIE ROBERTS 

Committee for Green Foothills 36 

Statement by WILLIAM SCHUMACHER 37 

Motion to Confirm .40 

Question by CHAIRMAN BURTON re: 

Choice Between the Environment 

and Jobs 41 

Effect of Pollution on Public 

Health 42 

Committee Action 43 

Termination of Proceedings 45 

Reporter ' s Certificate 46 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916; 362-2345 



1 

PROCEEDINGS 
— oOo — 

SENATOR JOHNSON: Seeing that Republicans can have 
courage, we're going to go ahead and begin in the absence of 
Senator Burton. 

William Hoy, Member of the California Regional 
Water Quality Control Board, North Coast Region. 

ASSEMBLYMAN DICKERSON: Good afternoon, Mr. Vice 
Chair. Assemblyman Dick Dickerson here to introduce to you 
Supervisor Bill Hoy, Siskiyou County Board of Supervisors. 
He currently serves as the chairman of that board. He's 
served them now for the past six years and is in the middle 
of his second term. He's also been working for the people 
of Northern California on the Regional Water Quality Board 
for the past six years, so you're considering his 
reappointment here today. 

I'm here to testify strongly in support of that 
nomination. He and his wife Nancy have been ranchers in 
Siskiyou County for a good number of years. He understands 
the issues concerning the water board in that area. He 
works for the interest of all people of Siskiyou County and 
the Northern District that he would be representing there. 
So I strongly urge the Committee to recommend this 
nomination to the full Senate. 

And I thank you very much for allowing me to 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916)362-2345 



2 

1 introduce Supervisor Bill Hoy. 

2 SENATOR JOHNSON: Mr. Hoy. 

3 MR. HOY: Thank you, Mr. Vice Chair and Members of 

4 the Senate Rules Committee. It is indeed a pleasure to be 

5 here and I'd like to thank Assemblyman Dickerson for such a 

6 gracious introduction. 

7 Probably the best way to introduce myself is I've 

8 served six years on the water board, and some of the issues 

9 that have been brought before us today concerning my 

10 confirmation, I'm proud to say that last year when I was 

11 chairman of that board, we probably took the most aggressive 

12 action concerning this matter that the board had taken in 

13 the past five years. 

14 We attempted — we had two public hearings, one 

15 tour of the site, and we went to work trying to put together 

16 a hearing on this issue. We had some conflicts and over the 

17 course of three and a half months my vice-chair and I worked 

18 together, having phone conference calls once or twice weekly 

19 on this issue. We had no procedure to follow how to put 

20 together this hearing, so we had to make our own proceedings 

21 concerning this. When we were just ready to proceed with 

22 the hearings, two of our terms on the board had expired. I 

23 was reappointed, another member was not. We had another 

24 member appointed to make a quorum. There was a conflict in 
2 5 that individual's background. 



PETERS SHORTHAND REPORTING CORPORATION 

5336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



3 

So three weeks before the hearing, we had a new 
member appointed, but in all fairness to her, we had three 
file boxes full of information, so — and we had already had 
taken two tours of the watershed and two hearings, I felt it 
was unfair to her and to the parties involved that we 
proceed. We then changed chairmanship of the board and as 
of yet we haven't been able to put together a hearing. 

This matter has been appealed to the State Water 
Resource Control Board and it is now to be heard in the 
superior court in Humboldt County. 

So thank you. 

SENATOR JOHNSON: Witnesses in support. 

MR. HOY: Mr. Vice Chair, it is my understanding 
that any witnesses would only have a minute and a half and I 
didn ' t think it fair to individuals in my county to take 
four hours to drive down here for a minute and half — 

SENATOR JOHNSON: I can understand. But there may 
be someone that neither you nor I are acquainted with. 

MR. HOY: Oh, I'm sorry, sir. 

SENATOR JOHNSON: Witnesses in opposition. Please 
come forward . 

MR. KRAEPELIEN: And if we could — we're actually 
opposed to two nominations, so we would be willing to listen 
to Dina Moore and then respond to both of them. 

SENATOR JOHNSON: All right, fine. Please, if you 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



1 care to come forward. 

2 MR. KRAEPELIEN: I was saying that we're opposed 

3 to the nominations of both Mr. Hoy and Ms. Moore, and if she 

4 want's to speak in favor of both the same reasons. 

5 SENATOR JOHNSON: No, that's fine. Just come 

6 forward and give us your name and your reasons, that's fine. 

7 We will presume that you're incorporating by reference for 

8 both nominees. 

9 MR. KRAEPELIEN: I'd like to say I have eight 

10 copies of this. There's three of us here to speak, and we 

11 hope to be able to have more than a minute and a half, 

12 please, if possible. We've driven down and we've been at 

13 this for four years trying to do the same thing, we're 

14 continuing to do that now. 

15 My name is Jan Kraepelien. It's K-r-a-e-p-e-1-i- 

16 e-n. I'm a thirty-year resident of Freshwater, and a member 

17 of the Freshwater Watershed Working Group and Humboldt 

18 Watershed Council. We are residents and long time — long 

19 time residents and property owners in Humboldt County. We 
2 are not opposed to logging by any means. 

21 .We are seeking to stop these two nominations for 

22 two reasons. One is the vote, or however the procedure was 

23 done, to cancel these hearings. These were a violation of 

24 our due process rights. They were canceled. In the middle 
2 5 of the hearings, two happened — they had been postponed 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



twice, and they came up to us and finally just canceled. 
We're just finding out now how this happened, we do not 
know. We apologize right off the bat, but we would have 
also opposed Mr. Crowley's nomination, but it frankly 
slipped by us. We're a citizens' group. 

The second reason we oppose this, these 
nominations , we feel it's a pattern of the Governor who has 
in a sense micromanaged certain committees and boards to 
basically subvert the law, meaning the Board of Forestry and 
the Water Quality Board. 

I'm educated as a scientist. I work in a 
nonprofit section, now I'm a State-certified EMT. I have 
worked to get the water in Freshwater . I ' m a very much a 
community-oriented person. I just received an award from 
Virginia Steen Markenstein (phonetic) winner of the six 
community builders for last year. I gained — first off I 
gain nothing by doing this, I have no interest in it except 
to protect my watershed. I make nothing out of this. In 
fact, it is both a pain to me personally and quite a pain 
professionally for me to do this. 

We have been asking for the same thing for four 
years. We want independent analysis of the situation done, 
and we want monitoring. The pictures that I just passed out 
to you, let me show the photographs first, and that is the 
one that's the NASA photographs — but this is the second 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



1 one. The first one — these are NASA photos. They are part 

2 of a UC study which I will explain in a moment. These are 

3 photographs of Freshwater in 1994 and 1998. If you look at 

4 the 1994 photograph you will see a small blue area under the 

5 letter A, that is the Cummings Landfill, about a hundred 

6 acre, you know, clear area. In 1998, you see what Pacific 
Lumber, under the direction of Charles Hurwitz and Maxxam 

8 has done to our watersheds. Those are all clear cuts 

9 appearing in there. The reason they show up that clearly is 

10 because they were kept clear by herbicides. So they have, 

11 you know, in a sense shot themselves in the foot by making 

12 them so visible from space. 

13 We want to be very clear that the old kind of 

14 logging that was done in the old P.L. was satisfactory with 

15 us, the watershed was healing. Once Hurwitz came in and 

16 doubled and tripled the logging in our watershed, we started 

17 to see these damages. We are among five 303 just de-listed 

18 watersheds in the area. There's Freshwater, Elk River, 

19 Bear, Jordan, and St its are the five of them. According to 

20 the water law and the Porter-Cologne Act, these watersheds 

21 cannot be further impaired, and that's what this is all 

22 about. 

23 The first map here, this one is one that I made up 

24 and it was presented to the Board of Forestry in 1997. On 

25 the basis of this and other testimony we gave, this is what 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA y582~ (916)362-2345 



was going to be done. If you look at the two, the 
photograph and that map I made up there, they are really 
very, very similar, in fact, almost exactly coinciding. 

The Board of Forestry took two actions based on 
what we ' ve done then . One was to set up a committee to look 
into our things about cumulative watershed effects, 
something that was not being addressed in THPs, in timber 
harvest plans. They also set up and we asked for an 
independent analysis. This was set up under the UC study 
team, led by the University of California at Berkeley. That 
report has just come out and it affirmed what we were 
saying. 

Two of the key findings of that report are that 
the California Department of Forestry has no way to really 
evaluate cumulative water effects, so the cumulative damage 
effects that is going on. And second was that CDF is 
defining away the problem. Those are a direct quote there, 
"defining away the problems." In other words, they are 
taking what the Legislature has put down in the law and 
defining away things. For example, the word significant or 
cumulative watershed effects, they were just defining away, 
they said it didn't exist, they had no way to measure it, 
they were just not going to deal with it. Those photographs 
show you cumulative watershed effects. When you log that 
much, you get these kind of damages. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD SUITE 240. SACRAMENTO. CA 95827 (916)362-2345 



8 

1 The Governor frustrated our efforts there at the 

2 Board of Forestry. An interesting thing has come up here, 

3 that these hearings for the Water Quality were postponed 

4 because of a new member being aboard. Well, we saw a new 

5 member of the Board of Forestry sit and read off the changes 

6 that were going to be made in the cover rules package that 
we have gotten forth to there that were directly from the 

8 Governor. We felt that that was the way the line was coming 

9 through. And this was a new appointee, the rest of the 

10 members sat there and listened and they just voted aye and 

11 that was it. It was all over. So it's being very carefully 

12 directed. 

13 The second objective report — I'll be done in 

14 just one minute, please. 

15 SENATOR JOHNSON: I would prefer that you direct 

16 more specifically — 

17 MR. KRAEPELIEN: That's where I'm coming right 

1 8 now . 

19 SENATOR JOHNSON: — your objections to this 

20 nominee. Submissions are going to be judged on the basis of 

21 brevity. 

22 MR. KRAEPELIEN: I appreciate that. That's were 

23 I'm coming to is water quality. 

2 4 The staff report was the next objective report. 

25 These are people who have no stake in it at all. Water 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



9 
Quality staff had no interest in coming to our side or 
coming to support the things that we were saying except to 
do their job. In fact, it was quite an intrusion for them 
to do that. These hearings were canceled with no technical 
and legal basis that we can see. The Regional Water Quality 
staff is the ones that are experts in this. It has been 
said that this is going to the State board, for the State to 
investigate. It's our region that is investigating this. 
Redwood watersheds are different than other watersheds, so 
what's going in our area has been studied by that staff and 
has come out agreeing with what the UC study said again, for 
instance. 

So we are also — one other fact. This has been 
raised as a question about THPs and the lead agency being 
CDF. This argument is not about the approval of timber 
harvest plans or how that process is done, this is about 
what happens once logging operations start. Once they 
start, water quality is damaged. This water quality board 
is in charge of seeing that doesn't happen, much like if a 
logging truck speeds through an area, it's the CHP that's 
going to deal with the problem, even no matter what the THP 
was. The same kind of situation. 

So we are asking you that you turn down these two 
nominations. We are asking that another office — that 
there be an investigation by the Auditor General into the 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



10 

1 effects and the workings of the CDF, of the Board of 

2 Forestry, and the Board of — the Water Quality Board. 

3 And I would hope that you give Kristi Wrigley and 

4 Bill Bertain a chance to speak, please, for a minute too. 

5 Thank you very much. 

6 SENATOR JOHNSON: All right. Any other witnesses? 
Let's please try and be very brief, and not repetitive, if 

8 possible. 

9 MR. BERTAIN: Thank you, Mr. Chairman. My name is 

10 William Bertain, I'm an attorney in Eureka, California, and 

11 it's been my privilege to represent the residents of the Elk 

12 River Watershed for a number of years in our attempts to 

13 protect their property rights. I'd just like to ask the 

14 Chairman or the Vice Chairman, how many — has my letter of 

15 July 31st been made available to the Members of the 

16 Committee? 

17 SENATOR JOHNSON: Yes. 

18 MR. BERTAIN: Okay. You understand — or from my 

19 letter, I hope you have been able to conclude that we object 

20 to the acquiescence of Mr. Hoy and Mrs. Moore to the actions 

21 of the chairman of the Regional Water Quality Control Board, 

22 that's Mr. Daniel Crowley, whose law firm has in the past 

23 and continues to, as far as we know, represent Pacific 

2 4 Lumber. Now, Pacific Lumber is the — has been a focus of 

25 the Regional Water Quality Control Board's staff activities 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95«27 (916) 362-2345 



11 

for the last year or two because of their destructive 
policies on watersheds within their ownership over the last 
15 years since Charles Hurwitz took over Pacific Lumber. 

This has become a very important issue in Humboldt 
County. The destruction of watersheds, the ability for 
people who live in their homes without getting flooded out 
from the aggregation of streams resulting from massive, 
irresponsible clearcutting has grabbed the attention of the 
public and caused a lot of damage too. 

The stakes are high. These positions on the 
Regional Water Quality Control Board are very important. 
It ' s important I think for the function of the democracy and 
within the — and for the regulatory system for people to 
have the sense of fairness, and the appearance of fairness, 
and for — one of the partners, as I understand, in the firm 
in which Mr. Crowley is associated to kind of run 
interference for Pacific Lumber and Maxxam in dealing with 
the watershed, with the water quality issues, strikes me, 
and I think it would strike you and the members of the 
public, is entirely unfair. Mr. Hoy's problem, I believe, 
has been that he has acquiesced to Mr. Crowley's running 
interference for Pacific Lumber and for — and the 
disruption of this whole process of hearings which were 
asked for more than a year ago, and were scheduled last 
September. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (91ft) 362:345 



12 

1 Is that a sign? 

2 (Laughter. ) 

3 Is that an indication? 

4 SENATOR JOHNSON: It may be a sign from God, but 

5 it wasn't from me. 

6 (Laughter. ) 

7 MR. BERTAIN: Okay. Thank you. 

8 The question of impartiality, I believe, is 

9 critically important, and Mr. Hoy has been on the 

10 Committee — on the board for a number of years, and he has 

11 had the opportunity to rein in Mr. Crowley's activity. In 

12 the last eight months he has not done so. 

13 Mrs. Moore — it's an awkward situation. Mrs. 

14 Moore is from Humboldt County. She lives, I understand, at 

15 the top of the Freshwater watershed. She — her family has 

16 a large number of acres. I've had — I've been informed 

17 that it's in excess of 4,000 acres, and a large amount of 

18 that acreage, we believe and we're informed, that it borders 

19 Pacific Lumber's lands in both the Yager, Y-a-g-e-r, 

2 Watershed, which is a very large watershed, and in the 

21 Freshwater watershed, which is one of the watersheds that is 

22 being subjected to review by the Regional — or what is 

23 supposed to be subjected to review by the Regional Water 

24 Quality Control Board. 

2 5 Every other agency — and I mention that because 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 , (916) 362-2345 



13 
it seems to me to raise the question right off the bat, is 
there a potential for conflict of interest here — 

SENATOR JOHNSON: I'm sorry, I'm not following you 
here. Are you back on Mr. Crowley? 

MR. BERTAIN: No, I'm back on Mrs. Hoy — pardon 
me, Mrs. Moore. And that is if her family's ownership 
borders Pacific Lumber's property in both watersheds, Yager 
and Freshwater, and she's being asked — and it may be that 
they have mutual rights of way, they share mutual concerns 
regarding the use of lands in that watershed — 

SENATOR JOHNSON: Sir, I'm going to cut you off at 
this point. I think we've gotten the gist of your 
testimony, and I think to get into speculation that you're 
indicating that you have no evidence. 

MR. BERTAIN: I can assert that the ownership is 
very large and they border Pacific Lumber Company. I would 
ask — 

SENATOR JOHNSON: And I didn't interrupt you up to 
that point. It's when you got into the speculation beyond 
that that I interrupted you. If you would like to quickly 
conclude your testimony. 

MR. BERTAIN: I would. And we thank you for the 
opportunity to speak today. 

We believe that every other agency in the state 
has pretty much rubber stamped, closed their eyes, and acted 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 241). SACRAMENTO. CA 95827 (916) 362-2345 



14 

1 pretty much in complicity with Pacific Lumber's policies of 

2 destroying watersheds in Humboldt County. 

3 The only agency that didn't in the last three or 

4 four years has been the Regional Water Quality Control Board 

5 staff. And the staff was trying to do a good job, and a 

6 great deal of work was done, and then Mr. Crowley takes over 

7 the chairmanship, the hearings are postponed and then 

8 canceled, and Mr. Hoy and Mrs. Moore acquiesced in that. 

9 One more thing, and that is a Head of Agency 

10 Appeal was prepared by the appropriate officials at the 

11 Regional Water Quality Control Board staff. That Head of 

12 Agency Appeal went to Sacramento from the Regional Board 

13 staff, and in — on May 21st, 2001, with the acquiescence, 

14 we understand that Mrs. Moore and Mr. Hoy — Daniel Crowley 

15 on this letter head of his law firm, of which one of the 

16 chief lobbyists for Maxxam works, withdrew that Head of 

17 Agency Appeal, we believe in violation of the Administrative 

18 Procedures Manual, Water Quality, chapter 17 on the appeal 

19 of timber harvesting plans. 

20 It's not — it hasn't been possible for us to 

21 develop all the arguments to establish that if your 

22 Committee or some Committee in the Legislature could look 

23 into this type of behavior, to conduct an investigation, 

24 because it is a serious, serious — I mean there's a lot of 

25 Coho salmon issues, it's — issues are at stake, property 



PETERS SHORTHAND REPORTING CORPORATION 

333ft BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



15 
rights of people down the stream from Pacific Lumber are at 
stake. This is a critical issue in Humboldt County and we 
believe that the property rights of the people up in 
Humboldt County have been ignored by every agency, except 
the staff, not the — of the Regional Water Quality Board. 
And the board itself, however, has been — 

SENATOR JOHNSON: Cutting to the chase, you like 
the staff, you don't like the board. 

MR. BERTAIN: And we would like different 
appointments to the Board. 

SENATOR JOHNSON: Can we hear from the final 
opposition witness. 

MR. BERTAIN: Thank you, Mr. Chairman. To whom 
would I present these documents? 

SENATOR JOHNSON: I think we've been very generous 
with time, so if you would kind of try to encapsulate 
your — 

MS. WRIGLEY: I'll try, but I wrote it down so it 
will be probably four minutes . 

Okay. My name is Kristi Wrigley and I own and 
work a small eight acre, thousand tree apple farm in Elk 
River. My family has continuously farmed this for 98 years. 
There is a quarter mile of river that defines my property. 
It's my front yard, my backyard, and my side yard, and we've 
looked at it. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



16 

1 The Clean Water Act is not just a bunch of words 

2 on paper to be eclipsed by other words on paper like the 

3 Board of Forestry rules, it is the law to be followed by one 

4 and all, whether you're an individual, a corporate industry, 

5 or a public agency. The water of Elk River is the only 

6 source of good water for those of us who are living there, 
and it was degraded to the point of being unacceptable for 

8 either domestic or agricultural use after my only upstream 

9 neighbor P.L./Maxxam logged 60 percent of the watershed 

10 above me in less than ten years and logged right straight 

11 through not one, but two rainy winters. That was over four 

12 years ago, and I have been trying to get this huge problem 

13 adequately addressed ever since. 

14 The only public trust agency willing and capable 

15 was North Coast Regional Water Quality Control staff. By 

16 addressing Water Quality Board more than nine times, and 

17 staff about a dozen times, those of us who were the affected 

18 residents in Freshwater and Elk were able to get a hearing 

19 set which would address the lack of water quality and other 

20 water-related problems, such as flooding, and for me, loss 

21 of productivity in my orchard. 

22 Water Quality was able to get P.L./Maxxam to 

23 deliver domestic water and some ag water through a cleanup 

24 and abatement order in very late '98. And that was before 

2 5 Gray Davis appointed Dan Crowley to the North Coast Regional 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (91b) 362-2345 



17 
Water Quality Board. Dan's a partner at a law firm, 
Grandham & Reilly, which represents big business which you 
have heard about. And it represents interests like my — 
P.L., my upstream neighbor, that's responsible for the 
logging that caused all my water quality problems. 

Dan not only was appointed to the board, but he 
serves the prestigious position of chairman. 

SENATOR JOHNSON: Again, I'm going to ask you to 
get on with it. He's already serving, we're here. 

MS. WRIGLEY: Okay. I'm saying the board 
postponed hearings not once but twice, and finally 
indefinitely. The hearing was very important to those of us 
that were affected residents as Water Quality was the only 
public trust agency willing to help us with this. Suddenly 
all the hard work that we as residents had done was undone 
and all the very pertinent and important work that Water 
Quality staff had done and produced was relocated to the — 
and were trying to deal with that now, and it's probably 
never . 

The two nominees for North Coast Regional Water 
Quality Board, Ms. Moore and Mr. Hoy, are complicite in the 
measure and we ' re not only being deprived of our private 
property right, but deprived of due process. This is 
unacceptable in a public trust agency. 

The Clean Water Act was passed because water is so 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95S27 (916)362-2345 



18 

1 basic to survival and so paramount in importance at the same 

2 time. Water quality needs to be respected, the basic plan 

3 needs to be adhered to by everyone, industry as well as 

4 individuals. And when that isn't being done, the Clean 

5 Water Act, the Porter-Cologne Act need to be administered 

6 openly, fairly, and honestly. Anyone not determined to do 

7 so in order to preserve, protect, and restore water quality 

8 for the residents should not be on the board. 

9 Ms. Moore lives in Humboldt County, albeit up on 

10 Neeland (phonetic), where she might not be directly familiar 

11 with our water quality problems in the lower valley. Very 

12 few people are. I spoke briefly with Ms. Moore in February 

13 and she didn't seem to comprehend the gravity and 

14 significance of the situation for me and the other residents 

15 in Elk River. 

16 I have already been affected by this for over four 

17 years and we don't need to push out dealing with the 

18 destroyed water quality and even more damage to my orchard 

19 and our flooding, our ingress and egress. 

2 Mr. Hoy has been on the board and he surely should 

21 know how terrible the conditions in Elk River are. He was 

22 much more supportive of the hearing before the new chairman 
2 3 came on the board. Neither of these people should be 

24 confirmed for their lack of willingness to apply the Clean 

2 5 Water Act and the Porter-Cologne Act fairly and for their 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916)362-2345 









19 
willingness to deny citizens who are residents their due 
process. 

As an aside, an irony of this situation is clear 
to me, because in 1980 we were involved in the Apple Maggot 
Eradication Program and we had two flies on the ranch, and 
20 people from Sacramento came to visit. I've been 
struggling for four years to get you guys to pay attention 
to the four to ten feet of silt that's in my river and it's 
depriving me of my private property right, my riparian water 
right. It is extremely important. . 

Thank you. 

SENATOR JOHNSON: Thank you. 

MR. KRAEPELIEN: Can I have 30 seconds to sum up, 
literally 30 seconds? 

SENATOR JOHNSON: All right. 

MR. KRAEPELIEN: Thank you. 

SENATOR JOHNSON: Thirty seconds. 

MR. KRAEPELIEN: I appreciate it. 

I just wanted to say why this is important. The 
point was to make Freshwater a test case for different kinds 
of logging operations, because there's one single owner 
that's doing 99 percent of the logging, Pacific Lumber, 
instead of being able to shift it off. So it's very 
important. What we've set up, we think, is models for 
future work on monitoring, and it's been to monitor. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



20 

1 Monitor the water quality. And under — as I understand it, 

2 under the Habitat Conservation Plan and the Porter-Cologne 

3 Water Act that they have to monitor, perform after being 

4 requested to do so, and they were requested and did not do 

5 this. And I also have materials if you would like of the UC 

6 report and my deposition as well. 

7 SENATOR JOHNSON: All right. Give those to the 

8 Sergeant as well. 

9 MR. KRAEPELIEN: Thank you very much. 

10 SENATOR JOHNSON: Mr. Hoy. 

11 MR. HOY: Yes, sir. 

12 SENATOR JOHNSON: Do you care to add anything to 

13 the discussion that we've had. 

14 MR. HOY: Where does one start? Perhaps paramount 

15 in this whole discussion, it was referred to a time or two 

16 of Mr. Crowley's possible conflict of interest with these — 

17 the association with his law firm. I'd like to — 

18 SENATOR JOHNSON: Well, you know, Mr. Crowley is 

19 not up for — 

20 MR. HOY: Oh, okay, fine. Thank you. 

21 SENATOR JOHNSON: — today. So I don't know 

22 whether we need to go into that. 

23 All right. What's the pleasure? 
2 4 A question. Senator Romero. 

SENATOR ROMERO: Thank you. The US EPA, the 



PETERS SHORTHAND REPORTING CORPORATION 

3536 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



21 
nonpartisan legislative analyst, and others have noticed 
that in recent years there have been a decline, a rather 
precipitous decline, in inspections and enforcement 
activities by the Regional Water Quality Boards, and I'm 
curious as you've served on the board for six years, can you 
help the Committee understand what has contributed to this 
decline and what specific actions, if any, you have 
undertaken to turn this trend around? 

MR. HOY: Okay. Thank you. I'm glad you asked 
that question. 

To give you an idea of the magnitude of this 
region, my county alone has 6,400 square miles in it. Part 
of Modoc County, Humboldt, Del Norte, Sonoma, Mendocino, and 
Trinity Counties are in this region. So it gives you a 
magnitude of how large this facility — this region is. Up 
until a year and a half ago there was less than 16 staff 
members, and not only did they deal with forest practice, 
they also did underground tank cleanups, hazardous waste 
sites, and all that. So you were dealing with maybe at the 
most eight staff members to do with all the timber harvest 
plans, all the inspections of these facilities. 

In the last year and a half our staff has doubled, 
so our inspection numbers have gone up. So we are — you 
know, if we have the manpower, we have the ability to do 
more inspections, and we are doing more inspections now. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA y5827 (916)362-2345 



22 

1 SENATOR ROMERO: So it's been a question of 

2 staffing, and with the increase in staff there are more 

3 inspections taking place? 

4 MR. HOY: Yes. 

5 SENATOR ROMERO: Let me just ask a follow-up 

6 question. If you could describe what circumstances would 
you bring an enforcement action against violations of 

8 discharge requirements, and if you have done so on the board 

9 in the last six years, if you can describe that? 

10 MR. HOY: In what sort of discharges? 

11 SENATOR ROMERO: If you can go ahead and take the 

12 ones that — . 

13 MR. HOY: All right. Right now there's one that's 

14 right in the middle of Santa Rosa. There's a pocket of 

15 houses in Santa Rosa that are in the county but are 

16 surrounded by city. They have — the groundwater, where 

17 they get their water for their homes, since they're not in 

18 the city, they're not on the water system, has been 

19 contaminated by hydrocarbons and it's been linked back to 

20 dry cleaning facilities. And we are in the midst of through 

21 our staff, and this happened while I was the chairman, we 

22 directed the staff to do all we can to enforce and find out 

23 who is at fault. We have enlisted the City of Santa Rosa, 

24 the county, we have provided drinking water for these folks. 
2 5 We have provided wells with caps so they have clean water. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



23 
The City of Santa Rosa is in the process of bringing their 
water system to these folks and make it available to those 
if they so choose. So that's one of the enforcements we're 
doing. 

SENATOR ROMERO: Okay. 

MR. HOY: Another one, if you'd like, is Jenner 
Creek, which is a stream, it provides water for another 
small community, they take their water out of this creek. 
We just two months ago instituted an in-stream monitoring 
program to ensure that logging upstream has no effect on the 
quality of their lives. 

Those are some of the actions we've taken. 

SENATOR ROMERO: Thank you. 

MR. HOY: You're welcome. 

SENATOR KNIGHT: Move the nominee. 

SENATOR JOHNSON: All right. There's been a 
motion. If someone were to note the lack of a quorum at 
this moment, the Chair would have to accept that. So what 
I'm going to do is ask that Dina Moore come forward and 
let's have that discussion, and I think that we've had the 
opposition testimony applicable, so we will incorporate, 
sir, by reference the earlier remarks of the three 
witnesses, unless there's objection. 

Yes, ma'am. 

MS. MOORE: Good afternoon. It is with pleasure, 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



24 

1 I think, that I'm able to address you today. What I'd like 

2 to do is give you my comments regarding my confirmation to 

3 the North Coast Regional Water Quality Control Board. In 

4 addressing you today, I would like to share with you some of 

5 my own experiences that have served to help me qualify — to 

6 be qualified to serve as a member of this board. 

7 Over the past several years , I ' ve worked 

8 extensively with the EPA in building a collaborative, 

9 publicly supported, total maximum daily load for the Van 

10 Deusen River Watershed, a watershed that is impaired and on 

11 the EPA's 303 delisted. 

12 During that process, we partnered with the 

13 University of California Cooperative Extension and USDA's 

14 Natural Resource Conservation Service. I helped EPA 

15 facilitate multiple public outreach and educational 

16 meetings. As stated in the EPA annual report for 2000, at 

17 workshops, EPA's Chris Heppy answered landowner questions 

18 and concerns about total maximum daily loads. 

19 A measure of trust between Heppy and the 

20 landowners developed. Later, landowners helped Heppy assess 

21 sediment loadings to the river. The final product was a 

22 TMDL supported by local landowners. 

23 I also founded and am currently president of the 

24 Yager /Van Deusen Environmental Stewards, our acronym is YES. 

25 Our mission statement is as follows: To ensure the 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



25 

environmental integrity of our watershed while maintaining 
our heritage and the economic sustainability of our 
endeavors . 

In December of 2000, YES was awarded a 271 Grant 
from the Department of Fish and Game to undertake a 
watershed inventory and restoration planning project for the 
middle portion of the Van Deusen Basin. I've worked with 
the Department of Fish and Game, as well as the firm of 
Pacific Watershed Associates, in crafting and implementing 
that proposal. 

I believe that the future of managing the 
watersheds of California will be far and away one of the 
most critical and complex issues facing agencies, the 
Legislature, landowners, and stakeholders over the next 
several decades. I am committed to working proactively on 
those issues. 

I believe in collaborative efforts and on finding 
middle ground. I welcome the opportunity to be part of the 
solution. 

I look forward to answering any questions that you 
may have today regarding decisions made by the North Coast 
Regional Water Quality Control Board since January of 2001, 
which is when I started serving. 

Thank you for your time . 

And just for the record, the ranch on which I 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 24(1 SACRAMENTO. CA 95827 (916)362-2345 



26 

1 live, it has been in my husband's family for five 

2 generations, has no land holdings that drain into the 

3 Freshwater watershed, and we have never had any business 

4 dealings with Pacific Lumber Company. 

5 Thank you. 

6 SENATOR JOHNSON: Thank you.. 

7 Questions from Committee Members. 

8 SENATOR KNIGHT: Move the nomination. 

9 MS. MOORE: I do have an individual speaking on my 

10 behalf today, sir. 

11 SENATOR JOHNSON: Well, we've love to hear it. 

12 MS. MOORE: Thank you. 

13 SENATOR JOHNSON: In the interest of some balance. 

14 SENATOR KNIGHT: Is that your husband? 

15 MS. MOORE: No, my husband is not here, this is my 

16 friend. 

17 MR. MACON: I'll be very brief. 

18 Mr. Vice-Chairman and Members of the Committee, thank you. 

19 My name is Dan Macon. I am a consultant that has worked 

20 with agricultural and conservation groups throughout 

21 California, including in the North Coast region, and I am 

22 honored to be here to speak in support of Dina Moore's 

23 nomination to the North Coast Regional Water Quality and 
2 4 Control Board. 

2 5 Dina understands, in my experience, that economic 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 24(1. SACRAMENTO. CA 95827 (916) 362-2345 



27 
viability and environmental sustainability are two sides of 
the same coin. And as you heard in her testimony, she's 
worked with neighbors and with agencies in her region to 
protect water quality in the watershed in which she resides, 
and I think this will allow her to bring to the North Coast 
Board a sense of collaboration and an understanding of the 
importance of working landscapes in addressing water quality 
issues throughout the state. 

In my mind, Dina embodies a stewardship ethic that 
is important to this board and important to other 
environmental issues that we're dealing with all over. I 
know you've received a number of letters in support from 
folks that also had a difficult time making the seven-hour 
drive down here, and I join them in urging you to confirm 
her nomination. 

Thank you. 

SENATOR JOHNSON: Thank you, sir. 

Senator Knight. 

SENATOR KNIGHT: Move the nomination. 

SENATOR ROMERO: I have a question. 

SENATOR JOHNSON: A question. Go ahead. Senator 
Romero for a question. 

SENATOR ROMERO: Thank you. 

Ms. Moore, some folks have raised the concerns 
about potential conflicts of interest and how would you 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



28 

1 balance potential conflict of interest with your membership 

2 on the Water Quality Control Board, given that you are 

3 involved in the timber industry? First of all, if you could 

4 outline whether or not you do see it as a conflict, and 

5 secondly, if you could detail what you would do? 

6 MS. MOORE: I think that if there is a conflict, 
for starters, we do have legal counsel. In fact, our legal 

8 counsel is here today, and they, as I have learned since 

9 January, are an important resource for us. And as I already 

10 have asked legal counsel and will continue to rely on them 

11 quite heavily, if there's an area upon which I am concerned 

12 that I have a conflict of interest, I will ask them for 

13 their guidance. 

14 SENATOR ROMERO: Do you perceive any conflict of 

15 interest, and can you respond to some of the concerns that 

16 have been raised? 

17 MS. MOORE: I guess I would have to ask 

18 specifically what you're asking of. Conflict of interest 

19 with regards to myself and Pacific Lumber Company, no, I do 

20 not have a conflict of interest there, if you're asking 

21 specifically about that timber company. We are a 

22 neighboring landowner. I think Pacific Lumber Company 

23 probably has multiple neighboring landowners. As I stated 

24 earlier, we've never done business with Pacific Lumber 

2 5 Company, that sort of thing. Being that we are in — a part 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA y5827 (91b) 362-2345 



29 
of our business is in the timber business, my husband is a 
licensed timber operator, we do manage the timber resource 
on our ranch and our properties. If at any time the North 
Coast Regional Water Quality Control Board does have an 
action against a timber company that we currently have a 
contract with, then I clearly need to ask legal counsel, and 
clearly need to recuse myself, if that becomes an issue. 
Absolutely. 

SENATOR ROMERO: Thank you. 

MS. MOORE: Thank you. 

SENATOR JOHNSON: All right. There's been a 
motion. Secretary call the role. 

MS. WEBB: Senator Karnette. 

Senator Knight. 

SENATOR KNIGHT: Aye. 

MS. WEBB: Knight Aye. Senator Romero. 

Senator Johnson. 

SENATOR JOHNSON: Aye. 

MS. WEBB: Johnson Aye. Two to zero. 

SENATOR JOHNSON: Can we make a motion on Mr. Hoy? 

SENATOR KNIGHT: I made the motion earlier. 

MS. WEBB: He did earlier, yes. 

SENATOR JOHNSON: Okay. Call the role on that. 

MS. WEBB: Senator Knight. 

SENATOR KNIGHT: Aye. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



30 

1 MS. WEBB: Knight Aye. Senator Romero. 

2 Senator Johnson. 

3 SENATOR JOHNSON: Aye. 

4 MS. WEBB: Johnson Aye. Two to zero. 

5 SENATOR JOHNSON: All right. We'll place those 

6 matters on call. 

7 William J. Schumacher, Member of the California 

8 Regional Water Quality Control Board, San Francisco Bay 

9 Region. 

10 Good afternoon, sir. 

11 MR. SCHUMACHER: Good afternoon, Mr. Chairman. 

12 Good afternoon, Committee Members. I thought I'd have 

13 Senator Speier introduce me, but she's in meetings. 

14 SENATOR JOHNSON: She's on her way. 

15 MR. SCHUMACHER: Anyway, I'd like to say something 

16 about myself. I have — I live in San Francisco. I for 

17 many years lived in San Mateo County where I was a police 

18 officer, a prosecuting attorney in the D.A. 's office. I was 

19 elected to the Jefferson Elementary School District, served 

20 as Trustee and Chairman. I was elected to the city council, 

21 served as a council member and mayor. I was elected to the 

22 Board of Supervisors of San Mateo County and served three 

23 times as its chair, and I left because of term limits that 

24 we have imposed upon ourselves. I was just appointed to the 

25 Regional Water Quality Control Board by the Governor in 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



31 
November, and currently I sit on that agency. 

I'd like to tell you something about myself — 
oh — 

SENATOR JOHNSON : Here you go . We ' ve got to have 
a flashy introduction. 

SENATOR SPEIER: Well, Mr. Chairman, this won't be 
flashy, but it's very sincere. I have known — 

SENATOR KNIGHT: Is that what the flower's for? 

SENATOR SPEIER: It will squirt at you in another 
minute , Senator . 

I've known former Supervisor Bill Schumacher for 
over 20 years, and for six years we served on the San Mateo 
County Board - of Supervisors together. His career is one 
that has been almost exclusively in public service as a 
police officer, as a city councilman, as a school board 
member, as a teacher at the community college in poly 
science, and as a lawyer. He capped his public or political 
career on the Board of Supervisors for 12 years. 

During the six years that we served on the Board 
of Supervisors, we agreed probably 75 percent on — so there 
were times when we did not. I can tell you that he has a 
very agile mind, he has the scars of being in public life 
for over 30 years to suggest that he knows how to take the 
heat. He also knows how to stand his position, and there 
may be some people in the audience who are friends of mine 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



32 

1 as well who will be up here to oppose his nomination, and I 

2 regret that, but I can tell you that regardless of the 

3 comments you will hear, Mr. Schumacher will represent us 

4 well on the Regional Water Quality Board, and I have every 

5 belief that his service will bring pride to all of us in 

6 that position. He is I don't believe seeking public office 

7 any time soon, so serving as an appointee — 

8 SENATOR JOHNSON: Well, that's certainly in his 

9 favor. I wonder if we could test your theory. 

10 Is there anyone in opposition? 

11 Can I have those people come forward and the same 

12 admonition as previously to keep your testimony brief and to 

13 the point and nonrepetitive. 

14 MR. ALLAYAUD: Now? 

15 SENATOR JOHNSON: Yes. ... . 

16 MR. ALLAYAUD: Okay. 

17 SENATOR JOHNSON: Speak now or forever hold your 

18 peace. 

19 MR. ALLAYAUD: I'm Bill Allayaud, I represent 

20 Sierra Club California. This is the first time we've 

21 appeared before you this year to oppose anyone. It's not 

22 that usual, and it's a — it's a matter. This is a clear 

23 one, because we know we're never going to get Regional Water 
2 4 appointees who are perfect, that's okay. They are going to 
25 vote with us and against us sometimes. But this — 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



33 
appointments to this regional board are very important. 

We feel after the Coastal Commission, the State 
Water Board, and the Regional Water Boards are the 
preeminent environmental agencies in this state and we need 
strong appointees to these boards from the governors — from 
the Governor. We just don't think Mr. Schumacher is that 
person. We had a good long personal conversation, and I 
respect his ability — his willingness to serve the public 
in a civic manner, that's great, but his record as a member 
of the Board of Supervisors was not acceptable to most of 
our membership around the Bay, and his short record with the 
Regional Board is indicating those same problems, and we 
regretfully must oppose his confirmation. 

The following speakers have some specific examples 
too. 

MR. FEINSTEIN: Chairman and Senators, I'm Arthur 
Feinstein, I'm the Executive Director of the Golden Gate 
Audubon Society. And as the previous speaker has said, we 
met with Mr. Schumacher to try and work out things. But Mr. 
Schumacher does not seem to have a recognition of the 
importance of the environmental issues that will be facing 
him as a Regional Board Member. He's been a supervisor for 
many years, and the voting record is long and the next 
speaker will go into more detail about the number of votes, 
but you are hard pressed to find an instance where he has 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



34 

1 not voted against the environment in favor of some other 

2 issue. 

3 There are always reasons to vote against the 

4 environment, but you would expect in the long term as a 

5 supervisor in public office that occasionally you would find 

6 the opportunity to find where everything worked together to 
vote for it, and we're hard pressed to find those. The list 

8 of the ones, the anti votes, are, as I said, extensive. 

9 In his very first meeting at the Regional Water 

10 Quality Control Board, I think Mr. Schumacher clearly 

11 expressed his position on, for example, endangered species 

12 in streams when he said in talking about the Red Legged 

13 Frog, the San Francisco Garter Snake, which is perhaps the 

14 most likely species to go extinct in the Bay Area, that's 

15 what we hear from the Fish and Wildlife Service, and the 

16 Callippe Butterfly. Well, he said, "Well, you see them 

17 everywhere in my county." The implication being, he did not 

18 say, so what's the fuss. But the implication was very clear 

19 within the context of that meeting, why should we care. 

20 Previous discussions in previous meetings, way 

21 back when when he was talking about endangered species on 

22 San Bruno Mountain and environmentalists were asking for 

23 relief to this creature, he said, "Well, I didn't hear them 

24 ask for the developer's oldest child," implying that — you 

25 know, asking for protection for the oldest species was a 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



35 
battle on the same level as doing something like that. 

I'm sure he was a great public servant. That's 
not the question. The question now is, is he an appropriate 
person to be on the Regional Water Quality Control whose 
purview is our environmental health. His voting record says 
no, his quotes say no, he's the wrong person for this job, 
eminent as he might be in other roles. 

So we ask you to look very seriously at this and 
please reject his nomination. It's simply the wrong place 
for Mr. Schumacher to be serving the public. 

Thank you very much. 

MS. SPEIER: Mr. Chairman, I have to go on to 
another meeting. Can I just close my comments very briefly? 

SENATOR JOHNSON: Absolutely. 

MS. SPEIER: Thank you. 

First of all, you need to know Bill Schumacher, 
who is glib and will say things to be funny, and that 
happened, a quote in the paper. That never happens to any 
of us as we know. But I can also tell you that when it came 
to protecting San Bruno Mountain, supporting the Habitat 
Conservation Plan, which became a model for the nation, Bill 
Schumacher did support that. It was acclaimed as being one 
of the most far-reaching efforts to try and bring the 
protection of an endangered species and housing at a similar 
location. Many acres were set aside for the butterfly in an 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916)362-2345 



36 

1 effort to protect it and enhance its ability to procreate, 

2 and as I understand it, they've done it very well and very 

3 successfully in the interim. 

4 So I just come here and wholeheartedly endorse his 

5 appointment. 

6 MR. SCHUMACHER: Thank you very much, Senator. 

7 I would like to say — 

8 CHAIRMAN BURTON: Just a minute. 

9 MS. ROBERTS: Good afternoon, Members of the Rules 

10 Committee, I'm Lennie Roberts. I'm speaking for the 

11 Committee for Green Foothills. We are a membership 

12 organization with a thousand members in San Mateo and Santa 

13 Clara Counties and will celebrate our 40th anniversary next 

14 year. I will be brief. 

15 As a legislative advocate for San Mateo County 

16 since 1978, I attend nearly all of the Board of Supervisors' 

17 meetings and Planning Commission meetings at the county. 

18 And I would estimate that conservatively I attended 300 

19 meetings in the Board of Supervisors between 1980 and 1992 

20 when Supervisor Schumacher was on the board. On nearly 

21 every issue involving environmental protection, he was on 

22 the wrong side. He was actually hostile to a number of 

23 issues. 

24 We have numerous endangered species issues and 

25 wetlands and coastal protection issues in our county, and as 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 24(1. SACRAMENTO. CA 95827 (916) 362-2345 



37 
was brought up today, the Habitat Conservation Plan on San 
Bruno Mountain was the first of it ' s kind and it was adopted 
before I think Supervisor Schumacher was on the board, but 
it was amended repeatedly by the board when he was on it. 
Those were weakening amendments. 

Often — Senator Speier has spoken about Bill 
Schumacher's style. As a member of the public, I saw this 
style as a consistent irritant to people who came before the 
Board of Supervisors, often interrupting people or inserting 
opinions or asking challenging questions before they had a 
chance to complete their presentation. This often rattled 
people who are not used to appearing before a board, such as 
the Supervisors. It was also fairly common for him to 
challenge the staff in a, I would say, somewhat unfriendly 
manner . 

Our organization understands that diverse points 
of view are healthy on a regional board, such as our 
Regional Water Quality Control Board, but we believe that 
the record that Supervisor Schumacher has had when he was 
serving on the Board of Supervisors does not qualify him to 
be confirmed by your Committee. 

Thank you very much. 

MR. SCHUMACHER: I'd like to just point out that I 
was on the board for the Habitat Management and for the San 
Bruno Mountain, we adopted that. I did have a problem with 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 241). SACRAMENTO. CA 95827 ,' (916) 362-2345 



38 

1 some of the environmentalists. I wanted to put a county 

2 golf course, and I used to get criticized from fellow 

3 supervisors from around the Bay Area. They'd say we're the 

4 only county that doesn't have a golf course. We had a 

5 million dollars donated by Cecil Andrus under the Carter 

6 Administration to build a golf course, and we attempted to 
do that, I really pushed it. I failed. We lost to a Blind 

8 Harvestman Spider that lives in the cracks of the serpentine 

9 rock. 

10 SENATOR KNIGHT: A what? 

11 MR. SCHUMACHER: A Blind Harvestman Spider. 

12 SENATOR KNIGHT: Well, there is a spider? 

13 MR. SCHUMACHER: I guess. It's a mite. It's only 

14 a couple of millimeters long. 

15 But anyway, I was unsuccessful in pushing the golf 

16 course, and that was one of my problems with the community. 

17 I did vote with the environmentalists on many issues. 

18 Particularly with Lennie Roberts' issue here, over at the — 

19 let's see, it was on the coast, Ano Nuevo, and she remembers 

20 that, I'm sure. And I supported her position on that. Many 

21 positions I've supported with the environmentalists. Just 

22 that when it comes to, sometimes you have to make a 

23 decision, and this is a decision as a Supervisor. 

24 I supported business and labor, because many times 
2 5 during the 80's when I was on the board, we were having 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95S27 (916) 362-2345 



39 
somewhat of a depression, and here we had the compromise on 
San Bruno Mountain, we saved it for the butterfly. A couple 
of butterflies live on the top of the mountain, and the 
agreement was to build around the base for homes. And the 
developer made a remark — I did pop off. I do pop off 
periodically. But I said, you know, he went broke with the 
delay on trying to build the houses. So he went — he did 
— he went bankrupt on it. Somebody else is currently 
developing that particular segment. But at the time, we 
needed jobs, we needed people put to work, we had the 
agreement, and they still wanted to delay the implementation 
of that agreement. 

And so I just have a — you know, I think this is 
in the area of water. I have served as a — on the three- 
member board, and I dominated that board in the sense that 
it was the north San Mateo County Sanitation. So I had to 
fire the manager, the consultant, we had to clean up the 
odor, we had to clean up the effluent, we had to work with 
San Francisco and — in, you know, getting things in 
progress. 

I served on the San Mateo County water agency, 
dealing again with San Francisco and Hetch Hetchy water. I 
have some experience in that. I have experience in 
enforcement in the area of enforcing the law, and I think we 
have some slobs out there that do throw things, nonpollution 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 , (916) 362-2345 



40 



1 -- I mean nonsource pollution. We have to — we have a lot 

2 of work to do, and we have to clean up, and we have to 

3 educate our public not to be throwing stuff out, not to be 

4 throwing stuff in the sewers. 

5 We have many things we ' ve got to do in dealing 

6 with our sanitation agencies, with our water reclamation, 

7 with — it's real challenging. I think we have a great 

8 staff for the San Francisco Bay Area Water Quality Agency 

9 and I'm impressed with it, and I'd like to work with our 

10 fellow board members. And I respectfully ask for your vote 

11 for appointment — for confirmation. 

12 CHAIRMAN BURTON: Senator Johnson. 

13 SENATOR JOHNSON: No questions. 

14 CHAIRMAN BURTON: Senator Romero. 

15 SENATOR ROMERO: No questions. 

16 CHAIRMAN BURTON: Senator Knight. 

17 SENATOR KNIGHT: No questions, and I'll move the 

18 nomination. 

19 CHAIRMAN BURTON: Senator Karnette. 

20 SENATOR KNIGHT: She's not here. 

21 CHAIRMAN BURTON: What are you going to do, in 

22 other words, you gave your point of view about San Bruno 

23 Mountain and the butterfly. If basically the endangered 

24 species, if they call for doing something, I mean if you're 

25 going to put jobs, which I support, ahead of everything, 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95S27 (yl6) 362-2345 



41 
then you may as well let Standard Oil put a bunch of stuff 
into the bay, because, in other words, where are you going 
to — I mean, sometimes it's a close call and I don't fully 
understand the importance of the Snail Darter or the 
butterfly or the spider to the whole ecology whatever of the 
Earth, but people who do understand it explain it to me and 
I still don't kind of get it, but I mean I understand the 
importance. And where are you going to come down, because 
you can carry that, you know, well, we would shut down a 
plant and cost 1,500 jobs or we can let them keep dumping 
the sludge into the bay. I think you're going to be faced 
with those choices. And I mean, it's easy to denigrate, you 
know, the spider or butterfly or Snail Darter, or whatever 
dam that held up a long time ago, but, you know, you're 
going to get in a position where most of the pollution in 
the bay, I guess — or in the water you're going to have the 
MTBE because it's in the boats or whatever it is, or it's 
going to come from source, you know, in industrial 
pollution, and if you shut them down, because you might have 
to, it's going to a ton of jobs. But you have to be — I 
think a responsibility is to — it really comes to that 
thing to be able to make that choice. 

MR. SCHUMACHER: Oh, no, you're at the cutting 
edge. This is where science and public health, you know, 
come together. In other words, we would like zero 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 , (916) 362-2345 



42 

1 pollution, zero denigration of our air and water, and the 

2 question is that setting standards that can be achievable by 

3 science, and if it can't be, and it's still a public health 

4 problem, then it has to stop. 

5 Public health has to come before the — I mean, 

6 that's a different issue than some of the — on San Bruno 
Mountain we did preserve the butterfly and all we wanted to 

8 do was fulfill the agreement we had with the environmental 

9 community to build around the base of the mountain, and then 

10 they kind of — they wanted to stop that also. That had 

11 nothing to do with the butterfly and it just was kind of a 

12 no-growth issue. But public health has to come first when 

13 it comes to, you know, the air and the water, particularly 

14 the water. We have to have drinkable water, we can't have 

15 nonpotable water. 

16 CHAIRMAN BURTON: Is all pollution in the bay 

17 public health related? 

18 MR. SCHUMACHER: No, not all — 

19 CHAIRMAN BURTON: I don't mean like just a little 

20 bit, but I mean I think some of it has an effect — it may 

21 not have an effect on people, but have an effect on the 

22 species that somehow are important in the big picture? 

23 MR. SCHUMACHER: Oh, it is. It is important. I 

24 mean like San Francisco spent billions of dollars to stop, 
2 5 you know, putting in effluent into the bay. Now they 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



43 
discharge into the ocean, they've got secondary treatment 
plants. I mean, these things have to come about even though 
they're expensive. I mean, we have to — you know, we've 
got to preserve the bay and we have the — the wetlands are 
another issue. We have to see that we have the wetlands. 
Wetlands are a part of nature's way of cleaning water, and 
cleaning and providing for species, and we need the 
wetlands, and we have a problem with wetlands lost around 
the bay. 

CHAIRMAN BURTON: Well, I've known you for a long 
time and Senator Speier served with me for a long time, and 
her opinion, you know, counts a great deal with me. I would 
hope that you take the opposition to heart and don't degrade 
it back to the little butterflies on San Bruno Mountain and, 
you know, some houses down below, but look at this is an 
issue. Because your responsibility here is — 

MR. SCHUMACHER: Is the water. 

CHAIRMAN BURTON: — A, to the economy of this 
county, not to the building trades, it's to the water. And 
that's where your responsibility is and that's what we would 
hope that you would exercise. 

Call the role. 

MS. WEBB: Senator Knight. 

SENATOR KNIGHT: Aye. 

MS. WEBB: Knight Aye. Senator Romero. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA V5827 ,' (916) 362-2345 



44 



1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 



SENATOR ROMERO: Aye. 

MS. WEBB: Romero Aye. Senator Johnson. 

SENATOR JOHNSON: Aye. 

MS. WEBB: Johnson Aye. Senator Burton. 

CHAIRMAN BURTON: Aye. 

MS. WEBB: Burton Aye. Four to zero. 

MR. SCHUMACHER: Thank you very much. 

SENATOR JOHNSON: You didn't call the two 



previous 



CHAIRMAN BURTON: Why don't you call the two 
previous ones. 

MS. WEBB: Okay. Mr. Hoy. Senator Burton. 

CHAIRMAN BURTON: Aye. 

MS. WEBB: Burton Aye. That's three to zero. 

SENATOR ROMERO: Romero Aye. 

MS. WEBB: And Romero Aye. Four to zero. 

Moore. Senator Burton. 

CHAIRMAN BURTON: Aye. 

MS. WEBB: Burton Aye. That's three to zero. 

And Senator Romero makes it four to zero. 

(Thereupon Senator Karnette returned to 

the Committee Room and the roll was 

opened for appointees William Hoy, Dina 

Moore, William Schumacher and Senator 

Karnette added her aye vote, making the 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA y5827 (916) 362-2345 



45 
vote five to zero. ) 

(Thereupon the proceedings of the Senate 
Rules Committee were concluded at 4:40 
p.m. on August 27, 2001.) 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



46 

1 CERTIFICATE OF SHORTHAND REPORTER 

2 I, MICHAEL J. MAC IVER, a Shorthand Reporter, do 

3 hereby certify that I am a disinterested person herein; that 

4 I reported the foregoing Senate Rules Committee proceedings 

5 in shorthand writing; that I thereafter caused my shorthand 

6 writing to be transcribed into typewriting. 

7 I further certify that I am not of counsel or 

8 attorney for any of the parties to said Senate Rules 

9 Committee proceedings, or in any way interested in the 

10 outcome of said Senate Rules Committee proceedings 

11 IN WITNESS WHEREOF, I have hereunto set my hand 

12 this 17th day of September 2001. 
13 
14 
15 
16 
17 

18 Michael J. Mac Iver 

19 Shorthand Reporter 
20 
21 
22 
23 
24 
25 




PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA y5S27 (916) 362-2345 



439-R 
Additional copies of this publication may be purchased for $3.00 per copy 
(includes shipping and handling) plus current California sales tax. 

Senate Publications 

1020 N Street, Room B-53 

Sacramento, CA 95814 

(916)327-2155 

Make checks payable to SENATE RULES COMMITTEE. 
Please include Stock Number 439-R when ordering. 



L 500 




*1 




l+ol 




A* . -■( 






2. L«*n/i»fw'*' 



r 



4. HEARING 

SENATE^tULES COMMITTEE 

STATE OF CALIFORNIA 




DOCUMENTS DEPT. 

OCT 2 9 2001 

SAN FRANCISCO 
PUBLIC LIBRARY 



STATE CAPITOL 

ROOM 3191 

SACRAMENTO, CALIFORNIA 

WEDNESDAY, SEPTEMBER 5, 2001 
2:30 P.M. 



440-R 



SENATE RULES COMMITTEE 
STATE OF CALIFORNIA 



HEARING 



STATE CAPITOL 
SACRAMENTO, CALIFORNIA 



WEDNESDAY, SEPTEMBER 5, 2 01 
2:30 P.M. 



Reported by: 

Michael Mac Iver, Shorthand Reporter 





nm 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAVV ROAD. SUITE 240. SACRAMENTO. CA 95S27 • (916) 362-2345 



11 

APPEARANCES 
MEMBERS PRESENT 
SENATOR JOHN BURTON, Chair 

cr^T7\mriD once TnuvcnM cr-jna /-■ u -* ** ■»• 
ijui^n-. wis. ir\.v_/Oh_; uuiuiijv;:'! / y j.v" VrM? i ■ 

SENATOR BETTY KARNETTE 
SENATOR WILLIAM KNIGHT 
SENATOR GLORIA ROMERO 

STAFF PRESENT 
GREG SCHMIDT, Executive Officer 
PAT WEBB, Committee Secretary 

NETTIE SABELHAUS, Consultant on Governor's Appointments 
SUSIE SWATT, Consultant to SENATOR JOHNSON 
TIM SHELLEY, Consultant to SENATOR KARNETTE 
CHRIS BURNS, Consultant to SENATOR KNIGHT 
RYAN SHERMAN, Consultant to SENATOR ROMERO 

ALSO PRESENT 

DR. TOM HAINES, Pacific College of Oriental Medicine 

ELIZABETH GOLDBLATT, Council of Colleges of Acupuncture 

and Oriental Medicine 

LIXIN HUANG, American College of Traditional 
Chinese Medicine 

STEVE GIVEN, Bastyr University 

TA FANG CHEN, CAMA, CAOMA 

BRIAN CHEZ CHANG LOH, United California Practitioners 

of Chinese Medicine 

JOHN ZHENG DU, California Certified Acupuncture Association 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 'J5827 (916) 362-2345 






Ill 

INDEX 

Page 
Proceedings 1 

Governor ' s Appointees : 

apjyv KLAPMAN M . D . Member 

Acupuncture Board 1 

Background and Experience 1 

Questions by CHAIRMAN BURTON re: 

Task Force Meetings 2 

Hours of Study for Acupuncture Schools 

and Method for Determining Hours 3 

Questions by SENATOR JOHNSON re: 

Filing of Statement of Economic Interest 7 

Potential Conflicts of Interest 7 

Governor's Direction on Filing of 

Statement of Economic Interest and 

Potential Conflicts of Interest 7 

Why Was the Statement of Economic 

Interest Filed Seven Months Late 9 

Statement by SENATOR JOHNSON re: 

Filing of Statements of Economic 

Interest by Appointees 11 

Questions by SENATOR KNIGHT re: 

The Function of the FPPC and the 

FPPC ' s Importance 12 

Questions by CHAIRMAN BURTON re: 

Why Was the Statement of Economic 

Interest Filed Late, and Why was There 

No Response to the Committee ' s 

Communications 13 



PETERS SHORTHAND REPORTING CORPORATION 

5336 BRADSHAW ROAD. SUITE MO. SACRAMENTO. CA 5)5827 ,' (9161 362-2345 



IV 



Witnesses in Support: 

DR. TOM HAINES 

Academic Director 

Pacific College of Oriental Medicine 15 

ELIZABETH GOLDBLATT 

President 

Council of Colleges of Acupuncture and 

Oriental Medicine 19 

LIXIN HUANG 

President 

American College of Traditional Chinese 

Medicine 24 

STEVE GIVEN 

Clinic Program Coordinator for Acupuncture and 

Oriental Medicine 

Bastyr University 2 6 

Witnesses in Opposition: 

TA FANG CHEN 

Vice-President 

California Acupuncture Medical Association 

also, 

President 

Council of Acupuncture and Oriental Medicine 

Association 29 

BRIAN CHEZ CHANG LOH 

President 

United California Practitioners of Chinese 

Medicine 30 

JOHN ZHENG DU 
Acupuncturist 
California Certified Acupuncture Association 33 

Questions by SENATOR KNIGHT re: 

Is the Number of Hours the Schools 

Require Right Now Sufficient 3 7 

Will the Task Force Determine the 

Number of Hours Required 37 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 ,' (916) 362-2345 



VI 

Statement by CHAIRMAN BURTON re: 

Acupuncture Being Relegated as a 

Second-Class Discipline 52 



Questions by CHAIRMAN BURTON re: 

Notice for Board Meetings, Task Force 
Meetings 53 

Department of Consumer Affairs Letter 54 

Questions by SENATOR KARNETTE re: 

The First Board Proposal 55 

New Board Proposal 56 

Questions by SENATOR KARNETTE re: 

HMO Coverage for Acupuncture 5 9 

Adjournment 60 

Reporter ' s Certificate 61 



PETERS SHORTHAND REPORTING CORPORATION 

5336 3RADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



PROCEEDINGS 
CHAIRMAN BURTON: Gary Klapman, Governor's 
appointment to the Acupuncture Board. 






■ t_i. r~i -.:■- 



ucv,um-iiu v ci. 



important and an emerging force in healthcare in California. 
I have been practicing acupuncture for nearly 18 years, and 
I also practice emergency medicine. I've been on the 
Acupuncture Board since January, and this issue before us 
deals with some of the contentious issues before the 
Acupuncture Board and the acupuncture community. 

As more and more people are relying on 
acupuncture, not only as an adjunct to their western medical 
care, but many people are relying on oriental medicine as 
primary care. And as people are relying more on 
acupuncture, there is more need for acupuncturists. As 
there is a need for more acupuncturists, there is need for 
educational reforms. One of the issues before the board is 
the issue of a curriculum, and the apparent need in the 
acupuncture community to raise the standards . 

The previous acupuncture board passed a resolution 
to increase the numbers of hours required to 3,2 00 hours. 
This resolution never made it past the Department of 
Consumer Affairs, it was sent back, and when the new board 
came on and becoming familiar with it, the resolution died. 
Initially this resolution for 3,2 00 hours never really had 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



2 

an understanding of what hours were to represent. 
2 Presently the acupuncture board has established a 

task force. The purpose of the task force is to establish 

Once those competencies are recognized, the next object is 

6 to figure out how many hours it will take to fulfill those 

competencies . So this is basically a way of directing the 

8 curriculum issue through the front door, recognizing the 

9 need where these hours really are directed. And I think it 

10 would be much the same way of passing a budget bill without 

11 having an understanding of where the money was directed. In 

12 this case it's an issue of developing hours without having a 

13 recognition about where those hours are to be recognized. 

14 Presently, the task force, as I mentioned, has had 

15 a meeting and it has come under so far some optimistic 

16 outcome. We have possibly another couple of meetings in 

17 order to finalize the recommendations — 

18 CHAIRMAN BURTON: Is that the task force has had 

19 one meeting? 

20 DR. KLAPMAN: We've had one meeting so far. 

21 CHAIRMAN BURTON: So you may well have more? 

22 DR. KLAPMAN: We probably will have two more. 

23 CHAIRMAN BURTON: Or you may well not? 

2 4 DR. KLAPMAN: Oh, we definitely will have one 

25 more. It's already scheduled for next month. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



3 

CHAIRMAN BURTON: And then when the old board 
designed a standard, they started in the mid '90s when they 
discussed this issue, and then they came up with the 

-*-^/-t^THTT!,->T>*J -,4--."^f% -.' T> 1 f\ PLC! 4-^ ~.-> -C^-^- 4- U ,-> £. .^ 'U^.-...-V.~ ^.'»UJ.') 

^cuwhi:uc;uc;l-^.u:i u_ii ^- u V u uv_/ yv J-WJ- UXCBC uUuiiSf nyiiL. 

DR. KLAPMAN: Correct. 

CHAIRMAN BURTON: So they must have given either 
some consideration, or forgot about it for five or six 
years, but they must have given some consideration to it. 
So they had come up with what they determined to be the 
proper number of hours in preparation, and the new board, if 
it so desired, could have just determined whether or not 
they wanted to mandate the hours or not, rather than just go 
back to square one. 

DR. KLAPMAN: The people on the board — I 
actually made a resolution at the last meeting before this 
resolution was going to die, and the resolution that I had 
proposed was to make a 2,800 hour compromise. There was no 
one on the the board that felt comfortable enough with 
understanding the issues well enough to — 

CHAIRMAN BURTON: Then what are they doing on the 
board, if they don't understand the issues of acupuncture? 

DR. KLAPMAN: Well, this is a brand-new board. 

CHAIRMAN BURTON: Well, I know that, but they 
ought to stand — they may not understand the institute of 
beard, but they ought to understand acupuncture, they ought 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE MO. SACRAMENTO. CA 95S27 / (916) 362-2345 



4 

1 to understand the discipline, and once you're put there to 

2 either regulate or implement, if they don't understand the 

3 issue enough to figure out the aggregate, and this we don't 

4 knoiv enough to know how man 17 hour c th.6re a^ m^am -!+- • g 

5 got nothing to — in other words, what the heck are they 

6 doing on the board? 

7 DR. KLAPMAN: Well, I think the confusing part is 

8 the fact that the 3,200 hours was not very well delineated 

9 as to where those hours should go. 

10 CHAIRMAN BURTON: And, therefore, we started with 

11 the beginning that the earlier group, okay, over a period of 

12 years, because they started thinking about this in the mid 

13 '90s, and in 2000, after thinking about it for quite a 

14 while, and I assume, discussing it for quite a while, came up 

15 with the amount of hours. And it would seem to me that it 

16 would have made sense if there was a question about, okay, 

17 we now have these hours, how many of them go to this, how 

18 many of them go to that, how many of them go to something 

19 else, rather than going back to square one and figure out 

20 the number of hours. 

21 I mean, in other words, if the question was how 

22 many hours in each segment of acupuncture should they study, 

23 and I don't know much about, you know, what the various 

24 elements are, you know, whether it's some herbal medicines, 

25 whether it's this or whether it's that, but it seemed that 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



they could have and should have maybe confined themselves to 
and out of these X new hours, so much should be devoted to 
this, so much should be devoted to that, so much should be 

u= v u lcu uu L-ii— uunci Liij-iiy , ii. sccius ui_> lilts. 

DR. KLAPMAN: There seems to be a bit of an 
arbitrary estimation, because after the board made this 
resolution, they then set up a task force to try to 
understand where these hours should go. 

CHAIRMAN BURTON: They did that with the division 
last year, they were increasing traditional oriental 
medicine 140 hours; clinical, 285; western science, 192; 
herbal, which we hope to get the sales tax off of some day, 
150; ethics, 35; and then I guess optional, another 50. So 
they did have something in. 

DR. KLAPMAN: They did delineate in some more 
generalized fashion. One of the difficulties I think — 

CHAIRMAN BURTON: Well, what, were you guys going 
to dot every I and cross every T? I mean traditional 
oriental medicine, clinical, herbal, ethics, I mean, you 
know, like take Ethics 101 and Herbal 92.2? I mean, I'm 
missing — I am missing the situation, and my problem is 
that the district that I represent, and I started being made 
aware of apparent legislation of acupuncture a long, long 
time ago, back in the early '70s, and, you know, so I'm kind 
of much of their opinion, because they brought me to the 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA y5S27 : (916) 362-2345 



1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 



dance, so 


to speak. 


And 


it 


would 


seem - 


- in 


6 
other words , 


and I don ' 


t know, if 


you 


dor 


1 t know what 


the 


reason was 


either for the delay 


or ■ 


the 


stall, 


when 


first from your 


testimony 


x. l. Was in v iaui. 


l. no 


i_ youz 


_ -r , ._ „ i ~j j.^ u~ i ,• ~— ^ 


well they 


just upped 


the 


hours, 852, and 


had 


to figure out 



which courses to take, now — and they tell what areas they 
should do, and they just didn't delineate the courses, so 
you had to go back and figure out whether the hours were 
right? You might have wanted to go back and define, you 
know, English 6B and 6C, but, I mean, you went back to 
square — not you, the board went back to square one. 

DR. KLAPMAN: I think that's the way that it 
looks . 

CHAIRMAN BURTON: No, that's the way it is. 

DR. KLAPMAN: There was a difficulty as well in 
the public interest portion of the resolution, as well as 
some of the fiscal issues. Fiscal issues that would 
confront schools, students, and the public, to which the 
added cost of the hours would incur. These apparently were 
not adequately represented on the resolution proposal, and 
that ' s why the Department of Consumer Affairs apparently 
returned it to the board. 

CHAIRMAN BURTON: Maybe they could have got those 
people to give everybody an acupuncture certificate or one 
of those thincs . Could vou comment a bit — Senator 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA t>5827 , (916) 362-2345 



7 
Johnson. 

SENATOR JOHNSON: Thank you, Mr. Chairman. 
I should begin by saying I've been asking in 

us a series of questions. So I intend to ask you the same 
series of questions. Number one, when you were granted this 
appointment, what was communicated to you by the Governor or 
the Governor's office with respect to reporting requirements 
that you had in terms of the Statement of Economic Interest 
and any potential conflict? 

DR. KLAPMAN: When I became a board member, I 
received a large packet — 

SENATOR JOHNSON: No, let's back up. The question 
was, at the time of your appointment, before you were 
appointed, did anyone from the — did the Governor or anyone 
speaking on the Governor's behalf ask you questions about 
any potential conflicts of interest that you might have, the 
first question? 

DR. KLAPMAN: I believe they did, because I talked 
to someone from the Governor's office who asked me. some 
general questions, if I had anything that I would be ashamed 
of or would be uncomfortable at exposing. 

SENATOR JOHNSON: Did the Governor or anyone from 
the Governor's office talk to you about the legal 
requirements that you would have once you were granted this 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95S27 i (916) 362-2345 



1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 



8 
appointment? Did you file a Statement of Economic Interest? 
DR. KLAPMAN: No, I don't have any recollection of 
that at all. 

CTMQrrpD TAUMCnM . Pi i ^ =~=>-»-4- ^v/ntt, _, c V „• _ ^ ,• 4T j_U^^^ 

w EimAa ui\ uuiitiuvn . ^-- _ \-t f d^/d^.w j.j. WJJi G-OA.jli.aH ll L.1JK5JU C! 

was anything in your background that you might be ashamed 
of, did the Governor or anyone in the Governor's office talk 
to you in general about the moral and ethical tone of this 
administration? You know, I've read in the papers that the 
Governor thinks that the Legislature, all of his appointees, 
whether they're judges or whatever, you know, are to carry 
out or enact his vision. So was there any discussion of an 
ethical component in the Governor's vision? 

DR. KLAPMAN: I don't recall anybody — I don't 
recall anybody trying to influence my way of looking at 
things or seeing things, or wanting to espouse a certain 
philosophy. 

SENATOR JOHNSON: No, no, no. Did the Governor or 
anyone in the Governor's office say to you, you know, this 
administration is intent on a policy of the highest ethical 
standards, full compliance, not only with the letter of the 
law, but the spirit of the law? Did anyone say anything 
remotely like that to you? 

DR. KLAPMAN: I don't recall that. 

SENATOR JOHNSON: Okay. All right. I understand 



25 ~hat when you filed your Statement of Economic Interest 
I 

PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 340. SACRAMENTO. CA 05827 / (916) 362-2345 



24 



?q 



and, again, I'm not alleging that any conflict exists. I am 
alleging that there was a legal requirement to file that 
within 30 days, and you filed it seven months late. Could 



TT^MI f ol 'TCI T.Tl-l 

J s^^ •— ^ - L. «-*. O VVAi 



1 ' 



DR. KLAPMAN: Indeed, I'm guilty of the negligence 
and the procrastination of filing this late. There really 
isn't an excuse that I have that would justify that kind of 
negligence. I think that as nothing exists in isolation, 
there are some issues in my life that might be of interest 
to the Members here to perhaps put that somewhat in 
perspective. Two issues come to mind, and one is the 
hectic, busy life that I have on the one hand, and number 
two, my lack of experience in the political process and the 
political environment that I found myself in. 

SENATOR JOHNSON: Wouldn't it seem logical to you, 
you've gone through a vetting process with the Governor's 
office and he's asked you if you were interested in serving, 
and asked if there was anything in your background that 
might prove embarrassing to you, does it strike you that 
there was some obligation on the part of the Governor's 
office, knowing that you were not experienced to not serve 
on such a board and might not be familiar with the legal 
requirements and might not be aware of the importance of 
filing those documents, I mean, shouldn't you have received 
some advice? 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95S27 (916) 362-2345 



10 
DR. KLAPMAN: Well, I did receive a packet of 
2 materials, and this was within that packet of materials. I 
did never receive some spoken advice, and I agree with you, 

4rri' Trpn PQ T ' rn 1 pp>*"i «^ ■*- Vt <^ ■£ o *"» ^ O *iQ Kl t n^ ■? t> **- Vn o v^^n1t4--i/^^T 
-^ -*- v \_ . * CiO X -ilk xCui.i;xii^ ^ uiiu -v^iivv- JUO yXXiiU -l-ii i»::C £- ' w - l. i :_ \_- d. _l. 

world here that I had certainly did not understand the 

6 importance or significance of filing these in a timely 

7 fashion. 

8 SENATOR JOHNSON: Didn't you get a clue when in 

9 the spring you received a letter from the Fair Political 

10 Practices Commission saying that you were then some months 

11 late and that you had to pay a hundred dollar fine, didn't 

12 that sort of trigger something in your mind that maybe this 

13 was more than just something that was in a packet, like a, 

14 you know, return-to-school packet that a kid takes home to 

15 his parent? 

16 DR. KLAPMAN: Again, I think it should have 

17 clicked more of a responsive action on my part, but it 

18 didn't, as of course history has shown here. And I 

19 apologize for my — it really is negligence on my part, that 

20 is, I don't have an excuse for it. 

21 SENATOR JOHNSON: I appreciate that, and I'm sure 

22 the Members of the Committee appreciate that. I said at the 

23 outset these are a series of questions I've been asking a 

24 number of appointees, and, Mr. Chairman, I think there has 

25 been a very clear oattern thus far that the administration 



PETERS SHORTHAND REPORTING CORPORATION 

3335 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95S27 / (916) 362-2345 



11 

has done little or nothing to talk to their appointees about 
either the legal requirements or just in general the ethical 
requirements or a standard of ethics . And while this — 



r.r\~\ n T ^ ttaii m^TT t-»/-*4- »■%•■> c^ 3 v^ ■*- ^ t-\ "I r-N m -I t-i 



> ^ 4- -V~ <^ C7 *^ ^5 ^^ 4— ^t I •*% *3 V~ I *T 



there have been people who have been hired by this 
administration, and put in positions of authority by this 
administration, where those kinds of questions did matter, 
and put contracts that were entered into at risk and so on. 

I don't know, short of just beginning to oppose 
these nominees who have not filed their Statements of 
Economic Interest in a timely fashion, how to get the 
attention of the administration so that they begin — and 
I've described it as being, I believe, ethically tone deaf. 
They have an obligation, it seems to me, to not only advise 
nominees of the requirements of the law and to underscore 
the importance of complying with the law, but they have an 
obligation to set a tone from the very beginning and say 
these are the kinds of standards we expect from anyone 
appointed by this administration. 

Thank you, Sir. 

DR. KLAPMAN: And if you wouldn't mind, I have one 
other thing in that regard, and that is that there was 
really not anything I was attempting to hide in my delay. 

SENATOR JOHNSON: Sir, I don't allege that at all. 
I don't allecre that at all. But scmethinc is wronc when vcu 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95S27 , (916) 362-2345 



12 
begin to see a very clear pattern that everyone who is 
2 appointed, until I started asking these questions at least, 
has been left to their own devices. They may have gotten a 

4-C ss >-rn -i t-\ 3 nanlrof Tr*-\n VnAT.T p j-\ za /-» \r o +» ^ -P ^^-^-V>0"»^ m o 4- o v *i al C T 

presume that that was the case with you, there was a packet 
6 of materials concerning the board and its activities, 

bringing you up to speed, and somewhere in there was this 

8 form, oh, by the way, you're supposed to fill this out, but 

9 that no one has unscored the importance of that. And it 

10 goes beyond just the technical requirements of the law, it 

11 goes to setting the tone and raying we expect all our 

12 appointees to meet this kind of standard. I'm not alleging 

13 that you had anything to hide. 

14 Thank you. 

15 CHAIRMAN BURTON: Senator Karnette. 

16 SENATOR KARNETTE: No questions. 

17 CHAIRMAN BURTON: Senator Romero. 

18 SENATOR ROMERO: No questions. 

19 CHAIRMAN BURTON: Senator Knight? 

2 SENATOR KNIGHT: Well, I was just going to ask if 

21 you're aware now of what the FPPC is and what their function 

22 is and how important it is to recognize a letter from the 

23 FPPC? 

2 4 DR. KLAPMAN: Well, I have to say that I am being 

2 5 educated cruicklv, and I am appreciating the importance of 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 2-U). SACRAMENTO. CA 95827 / (916) 362-2345 



13 
things that I'm finding in the political world- And I 
appreciate the degree to which they pursue them. 

CHAIRMAN BURTON: We received your name December 

AUuii v/j- o::c _y caj. ^. \j \j \j . »v^ ocSxi u =. .lo •-. uci. u aiiuai. y j l;; , ^ v u j. • 

We got no response to that letter, and no response to phone 
calls for six months. We then asked the Governor's office 
to get the information that we requested. What was the 
problem in either responding to our letters and phone calls? 
Did you get the phone calls, did you get the letter? And we 
can't do anything on hearings until we get certain 
information, and it was like six months, and as we attempt 
to cooperate with the Governor's office, we contacted, I 
think, Mr. Voit and finally contacted you, to finally fill 
out — what was the problem? 

DR. KLAPMAN: I think, and perhaps understanding 
my side a bit, if I tell you a little bit about me. I 
practice emergency medicine about four days a week. I'm on 
staff at four different hospitals. I also have an 
acupuncture practice two days a week. I have two sons and a 
wife that I support, not only financially, but in person. 
I'm presently studying for board exams, recertifying board 
exams, in early November, which are required every ten years 
in my profession. I'm also during all that schedule trying 
to keep myself somewhat healthy, and I do various things to 
try to do this. So my schedule and my life is very 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE :4(). SACRAMENTO. CA 'J5S27 (916) 362-2345 



14 
squeezed, and I'm sure that in some ways it's no different 
2 than any of your own. 

And one of the things that I do on a day-to-day 

V-« a c *' c 1 c •*- *% nriori'f i vc c.rfa = a- -.' ^ •, tW -^a- t u -% -.-*,■> 4-^ j<-» j_ u -. a- t 

k^CtO^.^ J-3 UW £J_ 4- W_ -^ l__^ *JC Wild L. J. O W11CLU J. iiCVC l_<w> <_l<^ , UHG <_. J. 

need to do, what is good for me, what is not good for me, 
6 and this is one of those issues that I never realized the 
importance or significance of, and so my procrastination or 

8 my negligence of it, again, it's not an excuse for it, it's 

9 just negligent. 

10 CHAIRMAN BURTON: Which kind of begs the question, 

11 how are you going to find time to serve on the board, if you 

12 didn't have time to answer the phone call or look at the 

13 letter, and at least call someone and say, I got this 

14 letter, what's this about? It is kind of humbling for us to 

15 realize where we fit in the scheme of things. 

16 DR. KLAPMAN: Well, I have been serving on the 

17 board since January, which is another thing I forgot to 

18 mention in regard to everything else — 

19 CHAIRMAN BURTON: Did you ever think of talking to 

20 the Executive Director of the board and say, you know, I got 

21 this letter, I'm getting these phone calls, is this 

22 something I should do, something I should worry about? 

2 3 DR. KLAPMAN: In hindsight, certainly that would 

2 4 have been the obvious course. 

2 5 CHAIRMAN BURTON: Hindsight is a cruel thing. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA V5827 ' (916) 362-2345 



15 
Well, that's, you know, something else that — this is not 
to you, this is over here, but it maybe we also want to have 
the secretaries of or the directors of various commissions 
have a little, what would you call it, indoctrination of 
people that come in. And you would think that Senator 
Neilson's wife might have figured that one out. But, I 
mean, we ought to tell all of the — either the departments 
or the cabinets that they ought to do that, because — you 
know, part of the problem was, you know, as you say your 
negligence, part of the problem in the eyes of some 
Committee members is the negligence on the part of the 
administration when they appoint people and tell them that 
certain things are expected, especially as press reports 
come out . 

Witnesses in support. 

People are nodding their heads. If you are in 
support, would you come forward, please. 

Well, there is, you know — feel free to use the 
front as well. 

DR. HAINES: Yes, my name is Dr. Tom Haines, and 
I'm Academic Director for Pacific College of Oriental 
Medicine. It's the largest O.M. medical college in the 
United States. We have campuses in San Diego, New York, and 
Chicago. I've been working in this field for the past five 
years , and working with the Acupuncture Board in a very 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 9SS27 ,' (916) 362-2345 



16 
close sense. 

2 The schools are primarily in the middle of the 

issue of the hours, and our hours have regularly gone up. I 
tnixijc tine State's requirement ' s around twenty four, twenty 
five hundred hours . The schools on average are about twenty 

6 eight, twenty nine hundred hours. So we've been voluntarily 
raising the hours, and those hourly raises are generally due 

5 to perceived need within the field of acupuncture as the 

9 medicine becomes more available to us. 

10 Fifteen years ago, twenty years ago, there was 

11 very little of the medicine in our language, very little of 

12 the scholarly aspects of the medicine available in this 

13 country. Over the last 15, 20 years, that's done a dramatic 

14 change in a very rapid fashion. And the medicine has been 

15 embraced by the consumer, it will not go away, it works. It 

16 works in a lot of ways of our culture, it relieves stress 

17 reduction, et cetera. It's a very good medicine. 

18 What we're trying to do in the schools, however, 

19 is to get people on the Acupuncture Board that understand 

20 the educational process. As the Board is primarily driven 

21 by practitioners, primarily people of asian descent, they do 

22 not have the awareness of the educational processes in tnis 

23 country. As the medicine becomes more and more important to 

24 us in this country, there's going to be more and more 

25 integration. It's already becoming very close to 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 . (916) 362-2345 



17 



mainstream. 

The task force that Gary is now in charge of is a 
very important part of this process in the state of 



iXZ -i_ «= pj. != L. L.y 



illUV^il Uw UiiC ►J'-'-l-ii I- ii^W WUCiC L.iit= 



hours have pretty much been identified for the last four or 
five years. It's now where the placement of those hours 
really go. The documents you had, Senator Burton, was 
really from the profession, it was not a document generated 
by the schools, which are the people that understand 
curriculum. 

CHAIRMAN BURTON: I don't know, the document I 
have is from the Acupuncture Board myself, so. 

DR. HAINES: It's a document that was given to the 
Acupuncture Board by — 

CHAIRMAN BURTON: The Acupuncture Board's Initial 
Statement of Reasons. It's the Acupuncture Board. 

DR. HAINES: Yes. And it was generated not 
through the schools, but through the profession. And that 
was a document that was submitted for showing need, which 
was not accepted, simply because — 

CHAIRMAN BURTON: No, it was accepted by the 
people that did it, and then it was rejected upstairs by 
people who probably knew as much about acupuncture as I do. 

DR. HAINES: Or myself, in many cases. 

CHAIRMAN BURTON: Well, I hope you know something 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 , (916) 362-2345 



1 about it, you're holding yourself out as an expert. 

2 DR. HAINES: I ' m an expert in educational 
administration. 

L.-iniAi-iniv DuKiuiN: ui auupunCtuIc Of jubl 

5 generally? 

6 DR. HAINES: Educational administration for the 
last 35 years in higher education. 

8 CHAIRMAN BURTON: So you know nothing about 

9 acupuncture? 

10 DR. HAINES: I wouldn't know where to put a 

11 needle. 

12 CHAIRMAN BURTON: Then may I ask a question, why 

13 are we talking to each other? 

14 DR. HAINES: Basically, I'm trying to support Gary 

15 Klapman for being on the Board because of the necessary 

16 dynamics to get this medicine integrated into our culture. 

17 And as a school curriculum person, I'm speaking on his 

18 behalf of understanding the curriculum process and not to 

19 put the horse before the cart. If you identify 

20 competencies, then you put hours to those competencies. 

21 CHAIRMAN BURTON: Well, I thought they did, and 

22 then it was a question of — as I read it, it would be a 

23 question of whether you want to increase traditional 

24 oriental medicine 140 hours and clinical, 285, or vice 

25 versa, and split the difference. Which in my judgement is 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



19 

the way they probably should have gone, instead of going 
back to square one, because it was five years that the old 
board was sort of kicking this around, and, as you know, 
since about 1985, different legislative acts have expanded 
acupuncture. I remember when it started, like you had to do 
it under the supervision of an M.D. 

DR. HAINES: Yes. 

CHAIRMAN BURTON: And so things have changed a 
great deal since the '70s, but anyway. 

Yes, ma'am. 

MS. GOLDBLATT: Good afternoon, Mr. Chairman and 
Members of the Committee. 

My name is Liz Goldblatt and I'm president of an 
organization that's called the Council of Colleges of 
Acupuncture and Oriental Medicine, and we represent the 
accredited colleges and candidate colleges here in 
California, as well as the — over a dozen out-of-state 
colleges of acupuncture and oriental medicine that are what 
are called California approved. 

Actually, I had my first acupuncture treatment in 
San Francisco where I was born. I think it was in the late 
'60s, so I've been involved with this medicine for a long 
time, and I've been president of one of the colleges for 
about 13 years now. 

As colleaes . we are here to succcrt the nomination 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 ,' (916) 362-:345 



20 

of Dr. Gary Klapman, and this is because of for two reasons. 

2 One, is he is a physician, and he's an acupuncturist. And 

3 he also has expertise and understanding of both higher 

4 SGUuSuiCi. 2--i genera^, as wexj. as acupuncture s.n.v_i orisntsj. 

5 medicine in the United States. 

6 And this board is currently grappling with 
educational issues in the United States. And we believe as 

8 colleges, that it's very important to have a balance on this 

9 board, both practitioners from Asia, which is where the 

10 roots of our medicine come from, as well as practitioners 

11 trained in this country and those that have expertise in our 

12 medicine in this country, so they understand how higher 

13 education is being developed, in terms of our field in the 

14 United States, which is different than how it evolved — 

15 CHAIRMAN BURTON: Who did this — at the beginning 

16 did the original training of, I would guess, acupuncturists 

17 when they — I mean, were they like educated in China and in 

18 Asia where acupuncture started, or were they educated — I 

19 mean who were the original, you know, people that taught? 

20 MS. GOLDBLATT: It's my understanding, and I don't 

21 quite date back to the earliest schools, but that some of 

22 the earliest teachers in this country are certainly from 

23 Asia. 

2 4 CHAIRMAN BURTON: Yes. 

25 MS. GOLDBLATT: Yes. And the colleces have now 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 ,' (916) 362-2345 



21 
been around, actually, since the late '70s and the early 
'80s. Our accreditation commission was recognized by the 
United States Department of Education in '82, and our 

commission that was created in '82. And the issue of hours, 
I think, is what you brought up, Senator Burton, earlier, 
and I think the reason we are all here today in a sense is 
that it is a contentious issue. There is not a unanimous 
agreement in our field about that particular area. We now 
have — 

CHAIRMAN BURTON: And it was made — 

MS. GOLDBLATT: Yes. 

CHAIRMAN BURTON: Excuse me for interrupting. 

MS. GOLDBLATT: Sure. 

CHAIRMAN BURTON: It seems to me it was made 
contentious when the Department of Consumer Affairs, 
Acupuncturist Lot, I assume, overruled the Acupuncture Board 
that spent some years trying to come up with what they 
thought was an adequate number of hours for the profession 
whose duties or responsibilities were enlarged statutorily. 
So I mean, I don't remember there being contention when the 
board — at the board level when they did this, the 
contention came — the Department of Consumer Affairs 
decided they wanted them to start over. 

MS. GOLDBLATT: No. actually, all the colleces. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95S27 , (916) 362-2345 



22 

1 except one, opposed this raise in hours, and that is on the 

2 record. 

3 CHAIRMAN BURTON: They did? 

4 MS. GOLDBLATT: Yes, we did. And the main reason 

for that is, is it's rather complicated and if you'd like, I 

6 can try and give a very simple explanation of it. But right 
now, we are accredited at the master's degree, and I'm sure 

8 all of you familiar there with higher education, a 2,600 

9 master's degree is actually a very long master's degree in 

10 itself. And our field has been working for ten years to 

11 develop what we are calling it, it's a credible doctoral 

12 degree, and that degree will be a minimum of 4,000 hours. 

13 There's a lot of contentiousness in the field of what entry 

14 level will be, will it be the master's degree, will it be 

15 the doctor degree. Some practitioners have one view, other 

16 practitioners have another view, but the hour issue is a 

17 very contentious issue, and we believe that the 

18 practitioners and the colleges have not yet reached a 

19 consensus. It is our sense and my — I'm now a participant 
2 on the educational task force, and what we are moving 

21 towards as educators, as practitioners, sitting and working 

22 together, is we are looking at what are competencies and 

23 objectives, which is what you first looked at in education. 

24 And then you look at if the hours are appropriate. 

25 Excuse me. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 340. SACRAMENTO. CA 95827 , (916) 362-2345 



23 

SENATOR JOHNSON: Mr. Chairman, I wonder if I 
could ask the witness and the previous witness as well a 
simple question. How long have you known the nominee? How 

aT-» s3 1* tl T.tV* 3+- ^j*-»,T"»4-*-S^^4- V> 2TTA TT^\tt l^f-* /NT.T^ V» 1 TTV O T 1 TW >^ ,«-% ^ 1 n 4* /^ -V A H -i- r\ ^ 

in resolving these issues. 

MS. GOLDBLATT: All right. 

SENATOR JOHNSON: I want to know about this 
gentleman's qualifications, and since you've come up to tell 
me about his qualifications, I want to know why you're 
qualified to have an opinion on his qualifications? 

MS . GOLDBLATT : Thank you . 

SENATOR JOHNSON: So if you'd just tell how long 
have you known him and in what context? 

MS. GOLDBLATT: I've known Dr. Klapman for about 
two years, and when we had heard that there was going to be 
a vacancy on the board, I contacted a number of colleges 
throughout the United States, if they knew of someone in 
California who was familiar with higher education, who was 
an acupuncturist, and if they also might know of a 
physician, because as Dr. Haines was mentioning, the field 
of our medicine is moving towards integrated medicine, and 
having someone on the board that was an M.D. we also thought 
would be very important. 

We actually also thought it would be beneficial if 
the oerscn was not politically active and I'm afraid in seme 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



24 

1 ways that perhaps has worked against Dr. Klapman. But 

2 this -- the recommendation that came from Barbara Eldrick, 
who is the vice-president of the Council of Colleges on 

came with the highest of recommendations, in terms of his 
6 understanding of the field of acupuncture and oriental 

medicine, as well as his understanding of higher ed, as well 

8 as his interest in integrated medicine. 

9 CHAIRMAN BURTON: Thank you. 

10 Ma ' am . 

11 MS. HUANG: My name's Lixin Huang. I am president 

12 of the American College of Traditional Chinese Medicine in 

13 San Francisco. 

14 The American College of Traditional Chinese 

15 Medicine was founded in 1980, and it was the first graduate 

16 school, graduate program approved by the State to offer 

17 master of science degree, traditional Chinese medicine, in 

18 the state of California, also in the United States. Ever 

19 since then, we, you know, have brought up, you know, 500 

20 graduates with master of science degree, practicing 

21 traditional Chinese medicine all over the United States, 

22 however, 85 percent of them are in the state of California, 

23 and thev are verv active. 

24 The college has a very strong education curriculum 

25 in traditional Chinese medicine, and the majority of faculty 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



25 

teaching there are Chinese faculty or trained back in China 
and have worked in a hospital for years, and they have been 
teaching at ACTCM for 10 years or 15 years. 

vvixau j. wa.iii_ u.O pd-iiu Out j.s une ULiriJ.Cuj.uiii j.s 

developed by the faculty. Faculties can teach students who 
will practice medicine, have the best say or tell us what 
should be developed, what content, how many hours, and we 
should respect faculty feedback highly. In higher 
education, faculty are the key in developing the curriculum. 

And second, I want to point out is the integration 
today in Chinese medicine and western medicine is really a 
triumph. Take ACTCM, the American College, as the example. 
We have been working with the City and County of San 
Francisco since 1992, providing Chinese medicine, use the 
funds from the right life (phonetic), which is federal 
government funding to treat HIV/AIDS patients, and that 
program has been going on for nine years . 

CHAIRMAN BURTON: Ma'am, I wonder if you could 
direct your — how long have you known the doctor here? 

MS. HUANG: Ever since Dr. Gary Klapman served in 
the Acupuncture Board. We feel that his background in both 
western medicine, as well as in acupuncture, will be a very 

education, as well as the practice of acupuncture in the 

oi_ai_c: <-»X >wa. j. j. iOiuia . iilciciOic, x icai.j.y wOUxu j-j-Kc uw 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



26 

1 support: his appointment to serve on the Acupuncture Board. 

2 Thank you. 

3 CHAIRMAN BURTON: Thank you very much. 

4 Any other witnesses? 

5 Yes, sir. 

6 MR. GIVEN: Mr. Chairman, Members of the Panel, 
thank you very much for inviting us to speak here. 

8 My name is Steve Given. I'm currently the Clinic 

9 Program Coordinator for Acupuncture and Oriental Medicine at 

10 Bastyr University, which is a regionally and programmically 

11 accredited degree-granting institution that is approved by 

12 the State of California. I am also licensed as an 

13 acupuncturist in the state of California, and I have been 

14 going to Acupuncture Board, then Acupuncture Committee 

15 meetings, since 1991. Rather than reiterate all the other 

16 comments, I'll keep my comments very brief. 

17 I have known Dr. Klapman since he began serving on 

18 the Acupuncture Board. I'm sure you're all aware that the 

19 Acupuncture Committee and now the Acupuncture Board has had 

20 a difficult past at times. And what I have noticed and what 

21 I think is highly relevant here is that I've watched Dr. 

22 Klapman carefully, both on the task force and on the 

23 Acupuncture Board, and what I have found is that he is 

24 bringing an ability to develop consensus, he's bringing an 

25 ability to understand both the iDractitioner and the educator 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95S27 . (916) 362-2345 



27 
issues on the board, and he's open to new ideas. As far as 
I know, he has never outright said he would not support 
3,2 00 hours. He has to me expressed the opinion that he 
would support whatever was deemed by the task force to be 
appropriate for the profession. 

CHAIRMAN BURTON: Who's on the task force? 

MR. GIVEN: Who is on the task force? 

CHAIRMAN BURTON: Yes, or what's — if not by 
name, by six educators, four doctors, two nurses, how is it 
made up? 

MR. GIVEN: Members of the board — including 
Howard Moffet and Dr. Klapman are on the task force, members 
of the profession, a number of members of the profession sit 
on the task force, and members of the educational 
institutions . 

CHAIRMAN BURTON: And how is it broken down? 

MR. GIVEN: I don't have the statistics. 

CHAIRMAN BURTON: Do you have them doctor? 

DR. KLAPMAN: Pretty much we try to keep it as 
even as possible in regard to the schools, on the one hand, 
and the practitioners, on the other, and it's about eight- 
eight, and about 16 members and myself, and another board 
member. 

CHAIRMAN BURTON: Eight-eight, and two off the 

DOSru; 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 05S27 . (916) 362-2345 



1 

2 
3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 













28 






DR. 


KLAPMAN: Right. 










CHAIRMAN BURTON: Thank you. 










MR. 


GIVEN: So my support, in addition 


to respect 


for 




knowl 


<— ^ >-) C J-/C.C: c ^ 12) i;-.o c^- A.J. uy 




his 


abi 


lity to work with a sometime — 


sometimes 


difficult 



issues on the board, and I have been very favorably 
impressed in watching him work with the other board members 
and the members of the profession. 

CHAIRMAN BURTON: All right. Thank you, and I 
appreciate that. But the reason that we're having a 
hearing, that one would think is more protracted than usual 
for a member of the Acupuncture Board, is there seems to not 
be consensus. And that's — and I'm not saying right and 
I'm not saying wrong, but that's — you know, I'm looking 
out at several constituents of mine that I don't think would 
necessarily agree in that. And that doesn't mean there's 
anything wrong, I mean, it doesn't look like a lot of 
consensus. 

MR. GIVEN: I appreciate that, and I'm aware of 
those issues. What I'm suggesting is, his work on the 
board, his ability to build consensus, is better than what 
I've seen in the past ten years that I've been observing the 
board. So I'm not suggesting he can't do that. 

CHAIRMAN BURTON: Okay. Thank you. 

MR. GIVEN: Thank vcu. sir. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 24<). SACRAMENTO. CA 95827 / (916) 362-2345 



29 

CHAIRMAN BURTON: Thank you. 

Witnesses in opposition. 

MR. CHEN: Good afternoon, Chair and Senators. My 

Acupuncture Medical Association, also president of the 
Council of Acupuncture and Oriental Medicine Association. 

Right now our profession — just we feel education 
hours should care for treating patient, should they decide 
— we are initiating ways to take care of the patient, so 
this is the first step — point we give an idea of the 
school administrators. We wasn't concerned about patient. 
And it appears that education hours — 19 75, in California 
that education hours is 1,350 hours. By 1985, we increased 
it to 2,34 8 hours, and here right now, 16 years later. So 
we need to move for our education hours. 

The National Council of Colleges, they don't want 
California to move to up the standard, they want to keep 
California at a low standard, and we can pay off California. 
We don't feel that this is the right condition. California 
is leading the nation for acupuncture education. We don't 
feel California should sit back to wait for the national 
council to lead California. 

Thank you very much. 

MR. LOH: Senator, my name is Brian Loh. 

SENATOR JOHNSON: Let me ask a question. 



PETERS SHORTHAND REPORTING CORPORATION 

5336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 . (916) 362-2345 



1 

2 

3 
4 

5 
6 

7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 



















30 






CHAIRMAN 


BURTON : 


Excuse me, sir 


, there ' s a 




question 


that — 


















SENATOR JOHNSON: 


I never 


heard 


the 


basis of 


your 


cppcsi- 


i w 


1- *_ v_/ UllXj 


t-n /^ m -i r> o O 


You expressed 


a " 


tt ot.7 aKrin 

j 1 — ■- v» a .*_/ \_/ 1_4 


4- -l-Vna 


number 


of 


hours and that Cal 


ifornia 


be on 


the 


cutting 


edge 


and so 


on 


Do you 


feel this 


nominee would 


be 


contrary 


to 



that interest, or would not be open to that, or what's your 
gripe? 

MR. CHEN: Yes, because — Now, this president, he 
was against this increased hours at the high council board 
meeting. So we don't support this president. 

SENATOR JOHNSON: Okay. Thank you. 

MR. LOH: My name is Brian Loh. I'm President of 
the United California Practitioners of Chinese Medicine. On 
behalf of our association, I want to express our concern for 
the confirmation for Dr. Gary Klapman and Mr. Howard Moffet 
as a member of the Acupuncture Board. 

The first thing, our concern is that acupuncture 
and oriental medicine education standards , it should be in 
line with China and in line with other medical professionals 
in the USA, such as M.D.s, D.D.S, D.C.s. 

Mr. Howard and Dr. Gary Klapman did not understand 
the struggle that acupuncturists are going through. As we 
look at the year of 2 001, California Acupuncture Board 
schools curriculum hours in 26 schools, the average hours is 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 241). SACRAMENTO. CA 95827 , (916) 362-2345 



31 
only 2,966 hours, compared to M.D.s' 6,000 hours, compared 
to chiropractors' 4,200 hours, and compared to acupuncture 
schools in Bejing, China, it's 5,651 hours, and Chengtu, 

nU-:-, ," J- i ,-, C A A A kMiiws C ". <-»»■?■«■ >-> ". U ,-*,- 1 .- A _ v —J,,^-,^. ^ ,^„ 

v.ux::a r J. w. w vj , — i u llVJUXSa Du v^iaj. sv.uuux _y— cix. , cuuuauxuu 

hours, are really too low. Dr. Gary Klapman has been in 
full support — 

SENATOR JOHNSON: Excuse me. Excuse me, Sir. 
Senator Knight has a question. 

SENATOR KNIGHT: Yes, the hours that you presented 
for various rotations , I don ' t know whether that ' s good or 
bad. 

MR. LOH: This is from China. 

SENATOR KNIGHT: Well, but — 

SENATOR JOHNSON: You think that's the appropriate 
level, the 5,000 hours in Bejing or the 6,000 hours in 
Chengtu. It's not clear to us if you think that's a great 
idea that it be that long or not. 

MR. LOH: I think it's still not enough, because 
we want to raise our level to the mainstream, we must be 
compared to M.D.s and D.C.s — 

SENATOR JOHNSON: So it's your testimony that you 
don't think and in the judgment of the earlier witness, you 
don ' t think we should have some standard that ' s adopted 
elsewhere in the country, we ought to be more like China, 
and mere like M.D.s and other healthcare orof essionals in 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



32 

1 this country? 

2 MR. LOH: Yes. 

3 SENATOR JOHNSON: I think we've got that. Now, if 

5 suitability to serve or the lack thereof of this nominee, 

6 that would be most helpful. 

7 MR. LOH: Okay. Dr. Gary Klapman wants California 

8 to adopt a global acupuncture determined by the National 

9 Council. The National Council of Colleges of Acupuncture 

10 and Oriental Medicine minimum requirement is only 1,700 in 

11 the class hours. It was designed in order to qualify 

12 schools for government subsidence loans and grants for 

13 students. So California is leading the nation with the 

14 highest standard of acupuncture. We question Gary Klapman' s 

15 interest and skill in the keeping the — to lower California 

16 acupuncture standards, which would hurt California consumers 

17 and harm public health, safety, and welfare. Please don't 

18 confirm Dr. Gary Klapman as State of California board 

19 member. 

2 SENATOR JOHNSON: All right. Let me see if I 

21 understand this. Are you saying that this lower standard, 

22 which you say the nominee favors, this lower number of 

23 hours, if California were to adopt a higher standard, that 

24 it would somehow put at risk government subsidies and grants 

25 and student loans and so on that are being provided to 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA y5S2~ , (9161 362-2345 



33 

students under the present standards in California? 

MR. LOH: Well, I think we consider a professional 
practice must be not only considered a financial one. Even 

(Plica i_iid i_ s i_ i_n_i^ v_w j-<c dii ri.»U* o •— ^uc:: •_ , uuc 11,1,21, uiij-iiy , ^ v-> u 

just put the part of that first, then you consider your 
financial loans. 

SENATOR JOHNSON: The question that I asked was 
really a simple one. Are you contending that schools in 
California don't want to see more hours because they might 
lose federal funding in the form of grants or student aid or 
loans or whatever? Is that — did I understand that to be 
your testimony? 

MR. LOH: Yes, I guess so. 

MR. CHEN: Okay. So may I add? Because of the 
National Council they have an education meeting just with 
the Council, and it's for the school. So a school then is 
over against the National Council. This is in our problem. 
California Acupuncture tried that education. So California 
colleges is afraid of the — against the industry National 
Council 

MR. DU: My name is John Du. I'm an acupuncturist 
in Sacramento. Today I represent the CCAA, California 
Certified Acupuncture Association. My background, I come to 
the United States since 1985. I was in acupuncture in 
American Colleae of Traditional Chinese Medicine. That's 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. C.\ 95S27 . (916) 362-2345 



34 

i the Mr. Howard Moffet : s school at the time. He used to be a 

2 teacher over there. 

3 Do you understand? 

4 CHAIRMAN BURTON : Yeah . 

5 MR. DU: I first come to the United States as an 

6 acupuncture teacher to come to Mr. Howard Moffet's. It's in 
the United States that I had known him already. 

8 Do you understand? 

9 CHAIRMAN BURTON: Yes. 

10 MR. DU: It's more than 15 years already. Okay. 

11 Although I have known him for a short time, but I know just 

12 say he learned acupuncturist — acupuncture very little. I 

13 had taught over there for a very short time, and there I had 

14 known him. He got licensed, it just seems acupuncture 

15 license is so easy to get. And shouldn't acupuncture is 

16 very tough job. Okay. My problem, my generations of family 

17 who have been practicing acupuncture, and I went through 

18 M.D. school six years, and eight years, since 1966, until 

19 19 68. After M.D. school, I learned acupuncture in two very 

20 formal schools for four years. And I am the first 

21 acupuncture master degree from Chinese Medicine School. 

22 Okay. My family, I learned from the family a long time all 

23 ready. 

24 CHAIRMAN BURTON: Doctor, if you could tell us 

25 exactly what the problem — 



PETERS SHORTHAND REPORTING CORPORATION 

5336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA y5827 / (916) 362-2345 



35 

MR. DU: Yeah, a relevant point, I know. 

CHAIRMAN BURTON: Okay. 

MR. DU: At right here right now, I practice, I 
c-f-T_j start start- learn learn learn. ~iust feel 
acupuncture is a long-time job, hard job. This is the 
reason those 3,000, 4,000, 5,000, 6,000 still is the very- 
beginning. Just my — 

SENATOR JOHNSON: That's why they call it 
practice, I guess. 

MR. DU: So, my point is — or I taught to reach a 
point is objection to these two guys, okay, one is Dr. Gary 
Klapman, and Mr. Howard Moffet to be nominated as a member 
of the Acupuncture Board. The point is they really don't 
understand what's acupuncture, they think too simple. And 
powerless — we need more, okay, as much as we can. So 
that's much, we had a deal, just typical politics, okay. 
All the acupuncturists they flew from Stockton, California, 
all the staff showed up, 3,200 hours is all we need or not. 
And they all have the opinion already why they object. Dr. 
Klapman makes a compromise, has no reason. No reason to 
compromise . 

We should listen all our country's opinion. Many 
doctors older than me — I saw some older than me. They all 
agree right now, so far, we need 3,200 hours for the student 
teaching. Okay. Not the 2,800 hours compromise. So those 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 9582" ' (916) 362-2345 



36 
guys see the acupuncture too easy. That's no way to be a 

2 member of the Acupuncture Board. That's all I say, that's 

3 it. That's it. 

4 CHAIRMAN BURTON: One of the things that I don't 
understand is one would think that the schools would want 

6 longer hours and the practitioners less hours. I mean, so I 
don't understand what the schools — I don't understand the 

8 schools' situation exactly, but thank you. But the basic 

9 thing is you do not believe that the doctor has enough 

10 understanding of acupuncture and does not — is not 

11 following the fact that just more study could be done 

12 because of more responsibilities to the changes in medicine 

13 and the Legislature. 

14 MR. DU: Yes. 

15 CHAIRMAN BURTON: And just one last question. How 

16 much continuing education do you have to do once you're 

17 licensed? How many hours do you have to go back to school? 

18 MR. CHEN: Sir, I know we believe for it that to 

19 graduate first, so the first compromise 3,200 hours. 
2 CHAIRMAN BURTON: Thank you. 

21 MR. CHEN: The 3,200 hours. 

22 CHAIRMAN BURTON: All right, thank you. Thank you 

23 very much. 

24 Senator Knight. 

25 SENATOR KNIGHT: Thank you, Mr. Chairman. I'd 



PETERS SHORTHAND REPORTING CORPORATION 

5336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 ,' (916) 362-2345 



37 
like to ask Gary a question I think is — the number of 
hours that the schools require right now, is that sufficient 
to graduate an acupuncturist, and is that what we've been 

DR. KLAPMAN: Well, the required number of hours 
was resolved in 1985 to be 2,350 hours. Most of the schools 
that are approved by the Acupuncture Board now have twenty 
eight or twenty nine hundred hours . They have done that 
independently . 

SENATOR KNIGHT: Okay. 

DR. KLAPMAN: And so I think in answer to your 
question is that 2,350 is not adequate. 

SENATOR KNIGHT: Okay. Then 2,90 hours that 
they're utilizing today, is that adequate? 

DR. KLAPMAN: I would be able to better answer 
that question after this task force is finished. 

SENATOR KNIGHT: Okay. And the task force will 
come up with a recommendation for the number of hours to 
graduate an acupuncturist, right? 

DR. KLAPMAN: That's correct. 

SENATOR KNIGHT: And so are you for 1,500 hours, 
3,000 hours, 6,000 hours, or are you waiting for the task 
force to come up with a number of hours to support the 
education of acupuncturists? 

DR. KLAPMAN: The latter. I'm — 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA "5S27 ' (916) 362-2345 



38 
SENATOR KNIGHT: Thank you. 

2 DR. KLAPMAN: Thank you. 

3 CHAIRMAN BURTON: But you're on the task force, 

4 aren't you? 

5 DR. KLAPMAN: I am. 

6 CHAIRMAN BURTON: You're going to have to vote, 

7 aren't you? 

8 DR. KLAPMAN: Yes. 

9 CHAIRMAN BURTON: But you haven't got any idea? 

10 DR. KLAPMAN: Well, we have yet to — 

11 CHAIRMAN BURTON: You're going to vote last, 

12 waiting for the others or what? 

13 DR. KLAPMAN: No. But we have yet to actually 

14 delineate all of the competencies that we believe as experts 

15 in the field should exist for an entry-level practitioner. 

16 CHAIRMAN BURTON: Already those are established. 

17 Right now the schools on their own raise the hours? 

18 DR. KLAPMAN: That's right. 

19 CHAIRMAN BURTON: Without any supervision in 

20 deciding what they think is best and going to do it? 

21 DR. KLAPMAN: They have done it. 

22 CHAIRMAN BURTON: Was that right? 

23 DR. KLAPMAN: It seems to be working fairly well, 

24 because they're quite abreast of what's needed in the field, 
2 5 and 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95S27 / (916) 362-2345 



39 

CHAIRMAN BURTON: Well, then why even have a task 
force, why not just let them decide what ever is supposed to 
be done? 

DR. KLAPMAN : WelL we have other r ~ v rofe c:c: ionals in 
the field that are asking for more hours, and so there is a 
contentiousness not only with the schools, but with the 
practitioners . 

CHAIRMAN BURTON: When did the schools up their 
hours? 

DR. KLAPMAN: Afterwards. 

CHAIRMAN BURTON: After the old board made their 
findings or what? 

DR. KLAPMAN: No, no, no, this has been a 
progressive thing over the years. This has been a graduated 
process . 

CHAIRMAN BURTON: So their hours are ahead of the 
basic requirement hours set forth by the board? 

DR. KLAPMAN: That's right. It's the issue — 

SENATOR JOHNSON: It's the issue — 

CHAIRMAN BURTON: I don't know what the issue is. 

(Laughter. ) 

SENATOR JOHNSON: Can one sit for the examination 
to become a licensed acupuncturist in California with the 
minimum 2,350? 

DR. KLAPMAN: One cannot sit to take the exam 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



40 

1 unless they graduate from an approved institution. The 

2 institutions have been approved by the board. All of those 
schools have to have at least 2,350 hours in their 

4 curriculum. They all have more than that. 

5 SENATOR KARNETTE : I have a question. 

6 DR. KLAPMAN: I don't know if that answers your 

7 question. 

8 SENATOR JOHNSON: Yes, it does. I understand. I 

9 understand. You would not accredit a school, that is, you 

10 would not allow graduates of a school to sit for the exam 

11 unless they'd had a minimum of 2,350 hours? 

12 DR. KLAPMAN: That's right. 

13 SENATOR JOHNSON: But in addition to the minimum 

14 of 2,350 hours, they have to have a diploma? 

15 DR. KLAPMAN: That's right. From one of the 

16 approved schools. 

17 SENATOR KARNETTE: I have a question. If these 

18 schools you're speaking of, are they all in California?' 

19 DR. KLAPMAN: They are not. 

2 SENATOR KARNETTE: They are not. Okay. So then 

21 people come from out of state or from — and can take and 

22 sit for the exam; is that correct? 

23 DR. KLAPMAN: That's correct. If they have — if 

24 they graduate from one of these approved schools. 

2 5 SENATOR KARNETTE: Now, if we were — if the task 



PETERS SHORTHAND REPORTING CORPORATION 

.-336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 ,' (916) 362-2345 



41 
force recommends that there should be more hours, will that 
apply only to the state of California? 

DR. KLAPMAN: It will apply to the schools that 

schools that are out of state. 

SENATOR KARNETTE: So, in essence, if they want to 
practice in California and they're from out of state, they 
would have to, if their schools don't give that many hours, 
they would have to come to school in California; is that 
right? 

DR. KLAPMAN: I believe what can happen is that 
they can graduate from those schools and then make 
arrangements with the board to take classes to meet the 
number of hours in other institutions that are approved. 

SENATOR KARNETTE: Okay. 

CHAIRMAN BURTON: Thank you. 

Any other witnesses in opposition? 

What I'm going to suggest, Doctor, is that we now 
put this over. We will bring it back for a vote only at our 
next hearing, which I believe is Monday. 

SENATOR JOHNSON: It is Monday. 

CHAIRMAN BURTON: To try to figure out everything 
here. Because I don't understand the school — I don't know 
what the Acupuncture Board's doing, the schools on their own 
are now 25 percent above the basic minimum requirement. And 



PETERS SHORTHAND REPORTING CORPORATION 

5336 BRADSHAW ROAD. SUITE 241). SACRAMENTO. CA 95827 (916) 362-2345 



42 

they can do — I guess, they'll sit those additional hours 
that they are doing is up to each individual school to do 

3 with any way they want, right. 

4 DR. KZ.APMAN J AS lOn^ a c '*"h CiT7 ™aa*- -t-V>£i m-i r>-i Tnn-m 

5 CHAIRMAN BURTON: Right. And what you guys are 

6 doing is you basically undid what the old board did, now 
you're having a task force to figure out how things would — 

8 how the discipline should be divided in hours, and the 

9 schools are against this, because that would, I guess, give 

10 you some jurisdiction and some supervision over the schools, 

11 where now they can do 600 hours any way they feel like doing 

12 them. Well, you just said they could. You know, I'm sure 

13 you're not going to have Home Ec, but I mean, it would just 

14 seem to me that none of this makes a lot of sense to me. 

15 And so we thank you for your — thank you for your 

16 testimony. 

17 And again, if Senator Johnson didn't make it 

18 clear, the questions about, you know, the information 

19 appeared to not be given to you by the administration, has 

20 been asked to all appointees who've appeared here recently, 

21 and again, for what it's worth, if you ever get appointed to 
2 2 this or appointed to something else, and you get 

2 3 communications from, you know, the Senate or a legislative 

24 body or a government thing, it's kind of good, if not to 

25 answer, then to go to somebody on the Acupuncture Board and 



PETERS SHORTHAND REPORTING CORPORATION 

3335 BRADSHAW ROAD. SUITE 2-H). SACRAMENTO. CA 95827 , (916) 362-2345 



43 

say, I got this letter, do you know what this is ail about. 
Because, I mean, when you're new, one doesn't know. 
So thank you, and we will continue your 

PAn f l r-m a -t- -? «~>r-i -F r\y~ tt/-\+- «s Anl v n-!-i-t--il 1VT^>t-> /^ p tt 7\t-i<-5 -t-V\oriV irnn 

bWUJ. XJ-mv. U^WU -i-%_/j_ V W WW wi±J__Y UUbJ.^ i\L W 1 ± >-*. d J . iTlii^J. 1_1J.G,XXJV J\-/IU. 

again, Doctor. 

DR. KLAPMAN: And you guys, so you don't need my 
presence on Monday? 

CHAIRMAN BURTON: I don't think. 

DR. KLAPMAN: Thank you. 

CHAIRMAN BURTON: Dr. Howard Moffet, Member 
Acupuncture Board. 

Go ahead, Doctor. 

MR. MOFFET: Hi, I'm Howard Moffet. I wrote a 
letter to each of you, has that been distributed? 

CHAIRMAN BURTON: Right. 

MR. MOFFET: So that's basically my written 
statement. 

I just want to emphasize that I'm very interested 
in education, and I think that everybody is trying to 
improve education and have the best possible programs for 
training acupuncturists, there's just a lot of disagreement 
about what that looks like. 

The hours-based proposal was approved by the prior 
board. When we came on to the board, we got a note from the 
Department of Consumer Affairs , which I think most of us 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE :4(). SACRAMENTO. CA 95827 , (916) 362-2345 



44 
read as at the very least we needed to rework the proposal, 
2 we needed to provide some better justification or something. 
The letter read, and this is regarding the regulation 

A nflrVaOP "Tn t'-t-'c nnKl l'r 1 nnl i'pt; imnar'f q4- =>+- am c*n +■ -in +- Vio 

request for approval of regulations, it indicates not 
6 applicable. If the regulation change does not impact the 

public, i.e., consumers, how is it of value?" It goes on to 

8 say, "The Department does not like being put in a position 

9 that would necessitate Departmental rejection of a 

10 regulation package." 

11 So when we got that, we felt like at the very 

12 least we need to in some sense go back to the drawing board, 

13 we need to look at this, we need to provide some evidence of 

14 the necessity, and then bring this forward again. So when 

15 we — in our March meeting, we were looking at the — 

16 CHAIRMAN BURTON: So the Board of Consumer Affairs 

17 had no idea how increased education of somebody in a medical 

18 discipline would benefit the public? I'd rather have them 

19 in here. 

20 MR. MOFFET: Yeah. What I'm saying is when we 

21 came on the board we — 

2 2 CHAIRMAN BURTON: No, I'm asking what they said to 

23 you. 

2 4 MR. MOFFET: Well, this was how the package was 

2 5 submitted, which I was not on the board at that time, so I 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



45 
can't — 

CHAIRMAN BURTON: No, no, no. As I thought I 
heard — 

MR. MOFFET: Yeah. 

CHAIRMAN BURTON: — that the purpose of 
regulation or whatever it is, and this was a regulation, it 
was no — it wasn't like — it didn't seem like an 
imposition, it seemed like people in the discipline kind of 
wanted more required hours, that they wanted to, if 
possible, a couple of benefits would be is to have better 
trained acupuncturists. I would think that almost would 
speak for itself. 

MR. MOFFET: Yeah. 

CHAIRMAN BURTON: Okay. 

Senator Johnson. 



SENATOR JOHNSON 
CHAIRMAN BURTON 
SENATOR JOHNSON 



If this is the appropriate time. 

Yes, I think so. 

Thank you, sir. 
I'm going to ask you the same questions that I've 
asked the earlier nominee, and I've asked a number of 
nominees over the last several weeks. 

Number one, prior to your appointment, did anyone, 
either the Governor or anyone from the Governor ' s office or 
a representative of the Governor, ask you about any 
potential conflicts of interest that you might have? 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-Z345 



46 
MR. MOFFET: Yes. 

2 SENATOR JOHNSON: What was the brunt of those 

3 conversations, who did you have them with? 

£"11% . iiui [fill — ij.a.v-4 a CUuvci3ciLxuii r j. u<=_l-h= v <r .l ;_ 

5 was with Ron Wong or it could have been with his 

6 predecessor. I think there was someone prior to him that I 

7 may have also spoken to. 

8 SENATOR JOHNSON: And what was the conversation? 

9 MR. MOFFET: They — basically what I recall is 

10 kind of the impression that, you know, making it clear that 

11 I would be in some sense representing the Davis 

12 administration, that I would be part of the Davis 

13 administration in some sense. And that there was an 

14 obligation to act with integrity and ethically. And I'm not 

15 sure if that was explicitly stated, but that was the 

16 impression I came away with. 

17 SENATOR JOHNSON: Well, then you are the first 

18 person that I've directed this question to who's answered i- 1 - 

19 in the affirmative. So you're sure that they talked to yc 

20 about that? 

21 MR. MOFFET: Uh-huh. 

22 SENATOR JOHNSON: Did they talk to you about your 

23 legal obligations? 

24 MR. MOFFET: Prior to my appointment? I don't 



25 



. = - - 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 , (916) 362-2345 



47 
SENATOR JOHNSON: Okay. Did they talk to you 
about it after your appointment — 
MR. MOFFET: Yeah. 

O-janiuK uun^bvii. OI wa.__ J. i_ jusl a lOim i_iicil. 

was included in a package of material that you received? 

MR. MOFFET: Yes, afterwards I got the form and at 
some point I remember — we had a whole board orientation in 
January, but I filed in December, so I must have had this 
conversation with someone before that who pointed out to me 
the need to file that, and so I did. 

SENATOR JOHNSON: Was it someone on the staff? 

MR. MOFFET: Someone on the staff. I think it was 
probably Marylin Neilson, but it could have been someone on 
her staff or someone else that I talked to. 

SENATOR JOHNSON: Thank you, Mr. Chairman. 

CHAIRMAN BURTON: There were a couple concerns 
raised that I want to go through now. Under the 
legislation, the board's to include four acupuncturists with 
five years of experience in acupuncture. Have you had five 
clinical years as a full-time acupuncturist, what's your 
experience in the discipline? 

MR. MOFFET: I was licensed in 1991 and had a 
private practice for a while, and also practiced at the 
community clinics at the American College of Traditional 
Chinese Medicine. I've also practiced at Davies Hospital at 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA V5S27 / (916) 362-2345 



48 
California Pacific Medical Center. My practice was always 

2 part time, but I'd ,ve to figure out, you know, exactly — 

3 CHAIRMAN BURTON: Do you think you're close to 
i iivs, g.ive or tarce? 

5 MR. MOFFET: Yeah. 

6 CHAIRMAN BURTON: In April of this year, there was 
a site visit to the University of Swiss Medicine, and it was 

8 recommended they remove western diagnosis from the patient 

9 linic forms . Do you remember making that recommendation or 

10 why? 

11 MR. MOFFET: We had a discussion at the last board 

12 meeting about these recommendations we had made, and that 

13 was misunderstood. I would have to — I might have those 

14 notes here with me. 

15 CHAIRMAN BURTON: Well, just what is it? 

16 MR. MOFFET: Well, they had many blanks on the 

17 form for multiple diagnoses, and it was not clear. And I 

18 think what I had said was that if you're going to record the 

19 western diagnosis, it's a good idea to say that this was the 

20 diagnosis that the patient reported to us or the physician 

21 communicated directly to us. Because the patient had — 

22 CHAIRMAN BURTON: No, patients don't diagnose, 
2 3 they complain. Doctors diagnose. 

2 4 MR. MOFFET: Right. But the patient will come 

25 into an acupuncture clinic and say my doctor diagnosed me 



PETERS SHORTHAND REPORTING CORPORATION 

3336 3RADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95S27 , (916) 362-2345 



49 

with something. Or they'll just come in and say I have this 
disease, and you need to ask — well, you need to ask, did a 
doctor make that diagnosis, and then if they say so, you can 

B9TT „^-_ J_ U ^ «^ 2 4. J ^-.J- -U U ^ „ ^ J. -,' ^„ -L- _.,,,_ ^l, a „ ~,~~.~. J J -> — «. — . <» -J 

bci^, ^<c;j. Uiic ^/ai.icui,, i.;ic jjG.w-i.diw so._y o wii^_y w<=j.w uicjuuscu 

with this. 

CHAIRMAN BURTON: Well, why — 

MR. MOFFET: And it's different from a physician 
telling you directly. 

CHAIRMAN BURTON: So why would we want to remove 
western diagnoses? 

MR. MOFFET: I don't know. I think that that was 
misunderstood. We had a lot of misunderstandings with them. 

CHAIRMAN BURTON: It's stated that you recommended 
that the board reduce the number of questions on the exam 
from 25 to 200 for acupuncture, while other healthcare 
professions have at least double and triple, and sometimes 
quadruple that amount in their exams. Now, it's a 
contention that nobody complained about the length of the 
exam, except the person who wrote the exam, and says it 
would be easier for him if he had to write less questions. 
Do you recall any of that? 

MR. MOFFET: We had Dr. Hertz from the Office of 
Examination Resources come and talk to us, and this was one 
of his recommendations that we reduce the number. 

CHAIRMAN BURTON: And who is he? 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 , (916) 362-2345 



50 

MR. MOFFET: He is a — I believe he's the — I'll 
2 say the Director. 

CHAIRMAN BURTON: Director of what? 

MR. MOFFET: Director of the Office of Examination 

5 Resources. 

6 CHAIRMAN BURTON: From the State or something? 
MR. MOFFET: From the State of California. 

8 CHAIRMAN BURTON: So he wanted it reduced? 

9 MR. MOFFET: It was his recommendation. He said 

10 it would preserve the validity and reliability. He actually 

11 said it would be fairer. 

12 CHAIRMAN BURTON: The less questions, the more 

13 valid the test? 

14 MR. MOFFET: No. He said it would be just as 

15 valid. But after a certain point, you can ask a thousand 

16 questions, but, you know, you still could figure out whether 

17 someone knows the material. There was — I want to point 

18 out there — I looked in the minutes and there was no 

19 objections recorded, and — 

2 CHAIRMAN BURTON: Well, that's some of the — 

21 MR. MOFFET: Well, let me just say — 

22 CHAIRMAN BURTON: This is just so you know, some 

23 of the biggest mistakes we ever make sometimes go through 
2 4 unanimously. 

2 5 (Laughter.) 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA V5827 / (916) 362-2345 



51 
MR. MOFFET: Yeah, well, and here's what I'm 
talking, because I've heard these concerns. 

CHAIRMAN BURTON: I wasn't even thinking that way. 

MR. MOFFET: I've heard all these concerns 
subsequent to the vote, because we didn't hear them at the 
time. 

CHAIRMAN BURTON: Was the vote noticed so that 
people could — 

MR. MOFFET: Oh, yeah. What I told people is if 
this really undermined people's confidence in the exam, 
let's put the number back up. 

CHAIRMAN BURTON: Well, I think I'll get to what I 
think we're going to assume that is. 

MR. MOFFET: Okay. 

CHAIRMAN BURTON: And I'll try to remember it when 
I get through these other two things . 

Okay. There was a concern, let's see — and 
that's the problem. Let's review the government's process. 
Is it you were recommended by the colleges, as opposed to 
the profession, and then there was a concern about allying 
an accreditation commission for active function in oriental 
medicine, you conducted school site visits on behalf of the 
board, that would be the accreditation commission group. Is 
it at odds kind of with the crcfession? Because I think the 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA '.'5S27 , (916) 362-2345 



52 

i basic thing is that the profession feels that they are being 
2 maybe not treated like, but relegated or looked upon as 

second-class — as a second-class discipline in the medical 
profession by not having more hours, having, you know, let's 
shorten the test for these guys, when if you're in another 
6 discipline it's anywhere from 600 to 1,200 questions, and I 
really think what it gets down to is their basic concern 

8 that they feel that the board, and, unfortunately, as 

9 represented by the two doctors that are here today, do not 

10 hold that profession in much esteem. I mean, that is 

11 basically like, you know, we're so unimportant, we'll reduce 

12 the test — I mean, let's get it down to six questions, 

13 because we'll figure out if they know the difference, you 

14 know, between a needle and a nerve, and the lack of wanting 

15 to have more hours, I think. I think that is the basic 

16 concern. I don't think it — I don't know if it necessarily 

17 goes to either of you two gentleman as individuals, but it 

18 goes to a direction that they perceive the board going into, 

19 and this is a profession that had to fight its way from 

2 having — I can't remember if initially either the doctor 

21 had to be in the same room as them, it might have even had 

22 to be under the supervision, then under the prescription, 

23 then it was something else, then temporarily they could 

24 treat worker's comp, then permanent worker's comp, but for 
2 5 somethincj that' s been around orobablv loncier than 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95S27 .' (916) 362-2345 



53 

Hippocrates, they've had to fight their way into getting 
respect for their profession, and they see the actions of 
this board is either denigrating that as well, and I think 
that's the basic — you know, I think that's the bone of 
contention, at least of the people that I represent, and I 
probably, you know, represent maybe the most acupuncturists 
in the state, if not the nation, in one area. And that's — 
I think that's their basic beef. Isn't that something? 

MR. MOFFET: Yeah. And I'm sorry that they feel 
that way. I know that — I can't speak for Gary, but I 
think we both as members of this profession ourselves, 
certainly the last thing we want to do is degrade it. That 
our interest in the profession, our activities are because 
we are — we are trying to support the profession. 

CHAIRMAN BURTON: Well, and it seems again that 
maybe a lack of insensitivity . Now, I don't know when you 
decided — and again, if I was taking the test, I ' d be 
delighted to have it reduced, Doctor, okay. And why don't 
you cut out the whole last two pages, you know, and ask 
maybe who am I, and if I get half that right, I pass. Is it 
the kind of lack of insensitivity, and I'm wondering when 
you reduce that, when you do these things, how much notice 
do you really give, do they go out, are there mailings out 
to either the associations or the individual acupuncturists? 

MR. MOFFET: Not every acupuncturist is noticed, 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 9532? , (916) 362-2345 



54 
but anybody who wants to be on the mailing list can be on 

2 the mailing list for agendas and the agendas are posted on 

3 the website. And there were people there, there were a lot 

4f\T nfirsnl o ^ V»o>"0 ^ /-\ v c /-sm o T TH t ^O T* i m a Tt 4" ^ '-» Q *"* ^ 3 "■ •*- ^tti c ^4- T-» ^ >»- 

items relating to the exam, and they didn't — they didn't 

6 at that time speak up about this, so we heard about it 

7 later. 

8 CHAIRMAN BURTON: Okay. Well, that would be 

9 either a problem with notification or a problem with people 

10 sleeping on our side. 

11 Can you do me one more favor before we end this, 

12 because we will assume that the testimony from the earlier 

13 appointee was the same as this one, the concern about the 

14 hours and attributing the support is the same. Did you read 

15 the letter, the excerpt to the part of earlier, that came 

16 from the Department to you as a decider to reduce it? 

17 MR. MOFFET: Yes. 

18 CHAIRMAN BURTON: It's kind of a short letter. 

19 MR. MOFFET: Well, it's a page and a half, but I 

20 can read the — 

21 CHAIRMAN BURTON: Salient parts. 

22 MR. MOFFET: And I think basically they were 

23 saying there were problems with the — how, that maybe 
2 4 perhaps there were things missing from the proposal or 
25 something and this was our verv — 



PETERS SHORTHAND REPORTING CORPORATION 

5336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 , (916) 362-2345 



55 
CHAIRMAN BURTON: Go over again the part that they 
wondered what benefit it would be to anybody to have better 
trained acupuncturists. 

MT5 M^'C"CT? r n . T+- qsttc 4- Vi a +■ 4- V\ o ->~,Q/-n-i 1 p 4- -i /^r-> /ilisn/TQ 

package failed to address — I'm sorry, that's the next 
section. Well, I'll read it, "has failed to address the 
hardship of time and cost such a new requirement would 
create for students in schools." And then what I read 
before, "In its public policy impact statement in the 
request for approval of regulations, it indicates not 
applicable. If the regulation changed, it does not impact 
the public, how is it of value." So they — 

CHAIRMAN BURTON: All right. So they put not 
applicable, and the Department wasn't smart enough to figure 
out that the better trained you are, the better you might do 
the job. That's my comment and not yours. 

Senator Karnette. 

SENATOR KARNETTE: The proposal, the first 
proposal, was done by a different board that had a task 
force agreement? 

MR. MOFFET: They — yeah, it was passed by the 
board, two of whom are still on the board, the rest of whom 
their terms expired or whatever. 

SENATOR KARNETTE: And there was a task force, 
similar to the one that is in existence now? 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 'J5827 / (916) 362-2345 



56 

MR. MOFFET: I'm not sure. 

2 SENATOR KARNETTE : You don't know? 

3 MR. MOFFET: There may have been. I think there 

5 SENATOR KARNETTE: A committee. And this package, 

6 this proposal, was approved of by the previous commission or 

7 board? 

8 MR. MOFFET: Right. 

9 SENATOR KARNETTE: And then it went to the 

10 Department, correct? 

11 MR. MOFFET: Right. 

12 SENATOR KARNETTE: And this letter is a response 

13 to that proposal? 

14 MR. MOFFET: Yes. 

15 SENATOR KARNETTE: And so now, the board now feels 

16 that it should make another proposal based on the 

17 recommendations and ideas from that letter, right? 

18 MR. MOFFET: Yes. 

19 SENATOR KARNETTE: Now, is it your idea that 
2 whatever comes out from the task force you're going to 

21 recommend, are you going to follow, and go along with? 

22 MR. MOFFET: Well, I'm glad you ask that, because 

23 the task force is in the middle of doing it, and I really 

24 don't want to prejudice them by stating an opinion about 

25 that, but what I said to other people is I have a lot of 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95S27 , (916) 362-2345 



57 
confidence in Dr. Klapman as the chair of this task force, 
and I'm glad he is keeping an open mind as the chair. If 
the members want to express their opinions, I think that's 

J.J.UC uc i_ a j. «u xxKc u<^» ace waat one uaojs. iCiue 

recommends. I think we've got good people on the task force 
and a good chair, and I'm sure I'll support whatever they 
agree on. 

CHAIRMAN BURTON: Well, you don't want to do what 
it seems most of the people in the industry want to do with 
the hours, because you want to wait for a task force whose 
report you may or may not accept? It doesn't make a lot of 
sense . 

MR. MOFFET: I'm sorry, when you say most of the 
industry supports it, I don't think that's correct. 

CHAIRMAN BURTON: I'm not talking about the 
schools, I'm talking about the practitioners. 

MR. MOFFET: Okay. Well, as far as the 
professional associations have expressed their opinion, and, 
yes, they are pretty much in agreement on it. 

CHAIRMAN BURTON: Okay. So, but I mean, why — it 
just seems to me that we don't want to do anything, we're 
waiting for a report that we may reject, and then 
everybody's back to square one? I mean, I know ycu don't 
want to — 

MR. MOFFET: Well, I'm not opposed to 3,200 hours , 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 , (916) 362-2345 



1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 









58 


it ' s never come to a vote : 


cor me, none 


of the other members 


of the 


board ever made a motion to go < 


anywhere with it, so. 




CHAIRMAN BURTON: 


All right. 


Well, thank you, 


Doctor. 


1 1 1 Tn 1 1 Fi " w *—■ / w -»»• v^ w ^ .*_ 








MR. MOFFET: And 


just for the record, I'm not a 


doctor 


-- 








CHAIRMAN BURTON: 


Oh, I'm sorry. 




MR. MOFFET: Mr. 


Moffet is fine. Thank you 


though. 










CHAIRMAN BURTON: 


Okay. You 


re not a what? 




MR. MOFFET: I'm 


not a doctor. 




CHAIRMAN BURTON: 


You're not. 


Okay. 




SENATOR ROMERO: 


But you slept at a Holiday Inn 


Express 


last night? 








MR. MOFFET: That 


. 's right, I 


feel like one. 




(Laughter. ) 








Thank you all very much. 






CHAIRMAN BURTON: 


Do you have some f - ::d_ly here 


with you? 








MR. MOFFET: Yes, 


I do. 






CHAIRMAN BURTON: 


Sir, could 


you introduce them, 


please? 










MR. MOFFET: Yes, 


my mother, 


Laura Moffet. 




CHAIRMAN 3URT0N: 


Hi. 






Thank you. 







PETERS SHORTHAND REPORTING CORPORATION 

5336 BRADSHAW ROAD. SUITE :4(). SACRAMENTO. CA 95S27 . (916) 362-2345 



59 

MR. MOFFET: Thank you. 

CHAIRMAN BURTON: We'll put that — you're not 
related to Moffet Hospital, are you? 

CHAIRMAN BURTON: You wish? 

MR. MOFFET: So, it's the same situation, 
although. 

SENATOR KARNETTE: I have one other thing, 
Senator. 

CHAIRMAN BURTON: Yes, go right ahead. 

SENATOR KARNETTE: Acupuncture is now covered by 
HMOs and you're involved with these; is that right? 

MR. MOFFET: Acupuncture is occasionally covered 
by health plans, for instance, I used to work with a company 
working as a partner with Blue Shield, and Blue Shield has 
an HMO, and then they have a PPO, and indemnity, they have 
many, many plans, and some of them cover acupuncture, some 
of them don't. Sometimes it's an extra rider. So any 
health plan may or may not have that as a covered benefit. 

SENATOR KARNETTE: But, I mean, Kaiser does or 
does not? Kaiser? 

MR. MOFFET: Kaiser, I would say no. They do have 
acupuncturists at many of their medical centers, working in 
their pain clinics, but as a regular benefit, I wouldn't say 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95S27 (916) 362-2345 



60 

SENATOR KARNETTE : Thank you . 

2 MR. MOFFET: Thank you. 

3 CHAIRMAN BURTON: Thank you very much, Mr. Moffet. 

4 ( Thereupon the Senate Rules Committee 

5 proceedings were concluded at 4:10 p.m. 

6 on September 5, 2 001.) 



7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 241). SACRAMENTO. CA 95S27 .' (916) 362-2345 



61 
CERTIFICATE OF SHORTHAND REPORTER 
I, MICHAEL J. MAC IVER, a Shorthand Reporter, do 
hereby certify that I am a disinterested person herein; that 

T T"»'T)0'>'""^< = '"^ fho fnraam'nn Qon;a4-o Unloo Pnmm -i 4-4- oo nrnr>ooHi'nrfe 

— — W£*W_ — V _ w..w .i. —> — — -J——---, WW*...^WW .I.*....*. WW VWUIUMi V- WWW £*■•- WW S.^^J.11^ W 

in shorthand writing; that I thereafter caused my shorthand 
writing to be transcribed into typewriting. 

I further certify that I am not of counsel or 
attorney for any of the parties to said Senate Rules 
Committee proceedings, or in any way interested in the 
outcome of said Senate Rules Committee proceedings. 

IN WITNESS WHEREOF, I have hereunto set my hand 
this 2 6th day of September 2 001. 




Michael JS . Mac Iver 
Shorthand Reporter 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95S27 ■ (916) 362-2345 



440-R 
Additional copies of this publication may be purchased for $3.25 per copy 
(includes shipping and handling) plus current California sales tax. 

Senate Publications 

1020 N Street, Room B-53 

Sacramento, CA 95814 

(916)327-2155 

Make checks payable to SENATE RULES COMMITTEE. 
Please include Stock Number 440-R when ordering. 



L $00 




K1 




Zoof 




,1*. )i 









^HEARING 

SENATE RULES COMMITTEE 



STATE OF CALIFORNIA 




DOCUMENTS DEPT. 

OCT 2 9 2001 

SAN FRANCISCO 
PUBLIC LIBRARY 



STATE CAPITOL 

ROOM 3191 

SACRAMENTO, CALIFORNIA 

MONDAY, SEPTEMBER 10, 2001 
2:30 P.M. 



441-R 



SENATE RULES COMMITTEE 
STATE OF CALIFORNIA 



HEARING 



STATE CAPITOL 
SACRAMENTO, CALIFORNIA 



MONDAY, SEPTEMBER 10, 2001 
2:30 P.M. 



Reported by: 

Michael Mac Iver, Shorthand Reporter ■- ■ H- [ H ■■ '-.l f\ \ 






PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 I (916) 362-2345 



11 
APPEARANCES 
MEMBERS PRESENT 
SENATOR JOHN BURTON, Chair 
SENATOR ROSS JOHNSON, Vice Chair 
SENATOR BETTY KARNETTE 
SENATOR WILLIAM KNIGHT 
SENATOR GLORIA ROMERO 

STAFF PRESENT 
GREG SCHMIDT, Executive Officer 
PAT WEBB, Committee Secretary 

NETTIE SABELHAUS , Consultant on Governor ' s Appointments 
SUSIE SWATT, Consultant to SENATOR JOHNSON 
TIM SHELLEY, Consultant to SENATOR KARNETTE 
CHRIS BURNS, Consultant to SENATOR KNIGHT 
RYAN SHERMAN, Consultant to SENATOR ROMERO 

ALSO PRESENT 
MARC MARCUS, California Advocate Attorneys Association 
DOUG KIM, Consumer Attorneys of California 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



Ill 
INDEX 

Page 

Proceedings 1 

Motion to Confirm Mr . Mof f et 2 

Committee Action 2 

Governor ' s Appointees : 

FRANK M. BRASS, Commissioner 

Workers ' Compensation Appeals Board 3 

Background and Experience 3 

Witnesses : 

MARC MARCUS 

California Advocate Attorneys Association 4 

DOUG KIM 

Consumer Attorneys of California 4 

Motion to Confirm 5 

Committee Action 5 

JAMES C. CUNEO, Commissioner 

Workers ' Compensation Appeals Board 6 

Background and Experience 6 

Questions by SENATOR JOHNSON re: 

Advice from the Governor's office 

regarding the Filing of Statement of 

Economic Interest and Possible Conflict 

of Interest 6 

Witnesses: 

MARC MARCUS 

California Advocate Attorneys Association 8 

DOUG KIM 

Consumer Attorneys of California 8 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



IV 

Motion to Confirm 9 

Committee Action 10 

Termination of Proceedings 10 

Certificate of Reporter 11 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 (916) 362-2345 



1 

PROCEEDINGS 

CHAIRMAN BURTON: Governor's appointees for action 
only. Gary Klapman, Member of the Acupuncture Board, Howard 
Moffet, Member of the Acupuncture Board. 

We held lengthy hearings on the two appointees 
last week. We had a problem with the fact that Dr. Klapman 
did not respond to either the Rules Committee or the FPPC 
over a six month period when we were trying to contact him 
for information. He had allowed that between his practice, 
his teaching, and his family that he was just too busy to do 
that. I think with the problems that were raised by members 
within the community, that if he was unresponsive to the 
Legislature and the FPPC, I don't know how the people in the 
acupuncture profession would feel he would be responsive to 
them, and I personally am not — I am unable to support him. 

Mr. Moffet, although there was opposition to him, 
I think it ' s more over concern of the length of time it 
takes that they would want to study. I think that his 
qualifications seem to be fine. For that reason, and given 
Mr. Moffet 's testimony where he appreciated how serious the 
problems were, that I'm prepared to ask for an aye vote on 
him. And, additionally, I will ask the Committee on Rules 
to have the Joint Committee of Sunset Review, chaired by 
Senator Figueroa, to take a careful look — along with the 
Committee on Business and Professions, take a careful look 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD, SUITE 240. SACRAMENTO, CA 95827 / (916) 362-2345 



2 

at the issues raised during the hearings. And there is also 
a letter from the Council of Acupuncture and Oriental 
Medicine, which I am forwarding to the Committee. It's 
stressing concerns about licensure requirement. 

I think the frustration of many individuals in the 
community is that their concerns about education were 
dismissed too easily. The joint Committee is scheduled to 
conduct the Sunset Review Hearing and look forward to a 
careful examination of those issues. So, basically, I 
intend to support Mr. Moffet and not vote for Mr. Klapman 
myself. 

SENATOR JOHNSON: I would move the confirmation of 
Mr. Moffet. 

CHAIRMAN BURTON: Call the role. 

MS. WEBB: Senator Karnette. 

SENATOR KARNETTE: Aye. 

MS. WEBB: Karnette Aye. Senator Knight. 

SENATOR KNIGHT: Aye. 

MS. WEBB: Knight Aye. Senator Romero. Senator 



Johnson. 



SENATOR JOHNSON: Aye. 

MS. WEBB: Johnson Aye. Senator Burton. 

CHAIRMAN BURTON: Aye. 

MS. WEBB: Burton Aye. 

CHAIRMAN BURTON: It is approved. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



3 

1 Governor's appointees appearing today. Frank M. 

2 Brass, Commissioner, Worker's Compensation Appeals Board. 

3 Mr. Brass. 

4 MR. BRASS: Good afternoon, Chairman Burton and 

5 Members of the Senate Rules Committee. I would like to take 

6 this opportunity to thank Governor Gray Davis for appointing 

7 me to serve as a commissioner on the Workers ' Compensation 

8 Appeals Board. 

9 This nomination, subject to the confirmation and 

10 consent of the Senate, affords a unique opportunity to serve 

11 the people of California, my native state, and to repay the 

12 Workers ' Compensation community for a most rewarding 

13 professional life. 

14 I have practiced law before the Appeals Board 

15 since 1966. I have appeared at every district office from 

16 Fresno to the Oregon border. I represented injured 

17 employees for 17 years and I have represented insurance 

18 carriers and self-insured employers for 18 years. 

19 My divergent career has provided an extraordinary 

20 opportunity to observe the Workers' Compensation system from 

21 a myriad of viewpoints, and consequently to develop a 

22 balanced philosophy concerning delivery of benefits to 

23 injured workers. 

24 Thank you. 

25 CHAIRMAN BURTON: Questions, Senator Johnson? 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



1 SENATOR JOHNSON: No questions at this time. 

2 CHAIRMAN BURTON: Senator Romero. 

3 SENATOR ROMERO: No questions. 

4 CHAIRMAN BURTON: Senator Knight. Senator 

5 Karnette. 

6 SENATOR KARNETTE: No questions. 

7 CHAIRMAN BURTON: Do you have family here? 

8 MR. BRASS: Yes, I do. My wife Charlene Brass, my 

9 son, Tony Brass, his wife, Michelle. Their child, my 

10 grandson, Nicholas. 

11 CHAIRMAN BURTON: Where. 

12 MR. BRASS: They just stepped out of the room. 

13 My son, Frank Brass, and his wife, Jennifer. 

14 CHAIRMAN BURTON: Bring the kid in. 

15 (Laughter. ) 

16 CHAIRMAN BURTON: We'll just hold for a while. 

17 Are there witnesses in support? 

18 MR. MARCUS: Marc Marcus, California Advocate 

19 Attorneys Association. We in the organization and in the 

20 Workers' Compensation community have known Frank for many, 

21 many years, although recently he has been practicing on the 

22 opposite side of the fence. We know him to be fair, 

23 knowledgeable, and we enthusiastically support his 

24 candidacy. 

25 MR. KIM: Mr. Chair and Members, Doug Kim on 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



5 

1 behalf of the Consumer Attorneys of California. And we're 

2 also pleased to support Mr. Brass's nomination. 

3 CHAIRMAN BURTON: Do you think he went out to get 

4 a newspaper? 

5 (Laughter. ) 

6 CHAIRMAN BURTON: Oh, okay. All right. He's the 

7 only blond haired Nick in the whole country. 

8 Any opposition? 

9 All right. I'll move the nomination. Call the 

10 role. 

11 MS. WEBB: Senator Karnette. 

12 SENATOR KARNETTE: Aye. 

13 MS. WEBB: Karnette Aye. Senator Knight. 

14 SENATOR KNIGHT: Aye. 

15 MS. WEBB: Knight Aye. Senator Romero. 

16 SENATOR ROMERO: Aye. 

17 MS. WEBB: Romero Aye. Senator Johnson. 

18 SENATOR JOHNSON: Aye. 

19 MS. WEBB: Johnson Aye. Senator Burton. 

20 CHAIRMAN BURTON: Aye. 

21 Congratulations, Mr. Brass. 

22 MR. BRASS: Thank you very much. 

23 CHAIRMAN BURTON: And the record will note there's 

24 a letter from Peter Dugrolovich, attorney at law, Contra 

25 Costa County in support. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



6 

1 Next would be James Cuneo. 

2 MR. CUNEO: Thank you Senator. Frank's a hard act 

3 to follow. 

4 I was appointed by the Governor about three months 

5 ago and took my position on the Workers ' Compensation 

6 Appeals Board at that time. I appreciate his appointment, 

7 and I appreciate your time with me. 

8 I've done Workers' Compensation law for over 30 

9 years. I'm a certified expert by the State of California 

10 Bar. So I hope I brought some technical expertise to the 

11 board, but more importantly, I hope I approached each one of 

12 these appeals with an open heart and an open mind to 

13 consider the injured workers we have before us. 

14 Thank you, Senator. 

15 CHAIRMAN BURTON: Senator Johnson. 

16 SENATOR JOHNSON: Can you tell me what 

17 conversations, if any, you had with either the Governor or 

18 anyone in the Governor's office with respect to the 

19 standards that are expected in terms of conflict of interest 

20 and so on? Did you have such conversations, and if so, 

21 when, and were they three months ago when you were appointed 

22 or within the last week or two? 

23 MR. CUNEO: They were three months ago and within 

24 the last week. Last week they called to remind me of the 

25 standards and the necessity to have my statement on file. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



1 


7 
CHAIRMAN BURTON: Last week, Senator. 


2 


SENATOR KNIGHT: The word gets around. 


3 


SENATOR JOHNSON: In the course of those 


4 


conversations, did they make clear their desire to have 


5 


appointees adhere to the highest standards, and not merely 


6 


the technical requirements of the law and fill out whatever 


7 


forms are required? 


8 


MR. CUNEO: That was made very clear, Senator. 


9 


SENATOR JOHNSON: Again, was this in a more recent 


10 


conversation, or was this three months ago? 


11 


MR. CUNEO: It's the more recent conversation. 


12 


SENATOR JOHNSON: Thank you very much. 


13 


No more questions. 


14 


CHAIRMAN BURTON: Senator Romero. 


15 


SENATOR ROMERO: No questions. 


16 


CHAIRMAN BURTON: Senator Knight. 


17 


SENATOR KNIGHT: No questions. 


18 


CHAIRMAN BURTON: Senator Karnette. 


19 


SENATOR KARNETTE: No questions. 


20 


CHAIRMAN BURTON: And they don't think that you 


21 


have an effect on the administration. 


22 


(Laughter. ) 


23 


CHAIRMAN BURTON: Witnesses in support. 


24 


Brother Kennedy, are you here just to observe 


25 


or — okay. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



8 

1 MR. CUNEO: He's an ex-partner of mine. 

2 MR. MARCUS: Marc Marcus, California Advocate 

3 Attorneys Association. We're pleased to support Jim. I've 

4 been practicing Workers' Compensation law since 1976, and in 

5 1979, I came to Sacramento and I have been practicing in 

6 this town since then, which is where Jim has practiced 

7 defense. And so I've known Jim since 1979, and I want to 

8 thank the Governor and this Committee for getting him out of 

9 my hair. I've been able to settle some cases that I don't 

10 think I would have settled as well had he not been gone. 

11 Actually, Jim and I have also taught a class 

12 together at Sacramento State for a number of years, I forget 

13 how many. So I've known Jim in that capacity and in his 

14 capacity as a Workers Compensation lawyer, and I can assure 

15 this Committee that he will adhere to the highest standards, 

16 that he is knowledgeable and principled, and I think he'll 

17 be a credit to the board and to the injured workers of this 

18 state. 

19 MR. KIM: Panel Members, Doug Kim of the Consumer 

20 Attorneys of California, and we also are very pleased to 

21 support the confirmation of Mr. Cuneo. 

22 CHAIRMAN BURTON: So basically, we've got two 

23 people from the defense side appointed to this board today. 

24 Any witnesses in opposition? 

25 Any family? 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



9 

MR. CUNEO: Yes, I do, Senator. My wife of 34 
years, Janna. Janna is a Senior Development Officer for 
Sutter Hospital Foundation. And my son is not here, he's in 
law school, the second year, so he doesn't have a life right 
now. We'll see him in a couple years. And my daughter 
Janine, who we're very proud of. She graduated two years 
ago and went into AmeriCorps and spent a year in a women ' s 
abuse center in Portland, then a year in Phoenix helping 
around a soup kitchen and a homeless shelter. And she 
presently is the, I want to get this right, the Bilingual 
Outreach Loan Coordinator for Mercy Outreach. She goes out 
in the Spanish community and gets money and loans to people 
of that community so they can buy their first home. So 
we ' re proud of her . 

CHAIRMAN BURTON: Well, very good. Welcome. You 
might want to pay attention and read the bill on predatory 
lending. 

(Laughter. ) 

CHAIRMAN BURTON: So you don't get in trouble. 

All right. Move by Senator Johnson? 

SENATOR JOHNSON: Yes. 

CHAIRMAN BURTON: Call the role. 

MS. WEBB: Senator Karnette. 

SENATOR KARNETTE: Aye. 

MS. WEBB: Karnette Aye. Senator Knight. 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD, SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



10 



SENATOR KNIGHT: Aye. 

MS. WEBB: Knight Aye. Senator Romero. 

SENATOR ROMERO: Aye. 

MS. WEBB: Romero Aye. Senator Johnson. 

SENATOR JOHNSON: Aye. 

MS. WEBB: Johnson Aye. Senator Burton. 

CHAIRMAN BURTON: Aye. 

Congratulations . 

(Thereupon the proceedings of the Senate 

Rules Committee were concluded at 2:00 

p.m. on September 10, 2 001.) 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO, CA 95827 / (916) 362-2345 



11 

CERTIFICATE OF SHORTHAND REPORTER 
I, MICHAEL J. MAC IVER, a Shorthand Reporter, do 
hereby certify that I am a disinterested person herein; that 
I reported the foregoing Senate Rules Committee proceedings 
in shorthand writing; that I thereafter caused my shorthand 
writing to be transcribed into typewriting. 

I further certify that I am not of counsel or 
attorney for any of the parties to said Senate Rules 
Committee proceedings, or in any way interested in the 
outcome of said Senate Rules Committee proceedings. 

IN WITNESS WHEREOF, I have hereunto set my hand 
this 1st day of October 2001. 




Michael J. Mac Iver 
Shorthand Reporter 



PETERS SHORTHAND REPORTING CORPORATION 

3336 BRADSHAW ROAD. SUITE 240. SACRAMENTO. CA 95827 / (916) 362-2345 



1*3*'* 



441 -R 
Additional copies of this publication may be purchased for $3.00 per copy 
(includes shipping and handling) plus current California sales tax. 

Senate Publications 

1020 N Street, Room B-53 

Sacramento, CA 95814 

(916)327-2155 

Make checks payable to SENATE RULES COMMITTEE. 
Please include Stock Number 441 -R when ordering. 



LSOO 
M 



^ SENATE RULES COMMITTEE documents dept. 

STATE OF CALIFORNIA QCT 2 9 2001 

SAN FRANCISCO 
PUBLIC LIBRARY 
SHEARING: 

CONSIDERATION OF THE REPORT OF CONTEMPT 

BY ENRON CORPORATION SUBMITTED BY SENATE SELECT 

COMMITTEE TO INVESTIGATE PRICE MANIPULATION OF THE 

WHOLESALE ENERGY MARKET 




STATE CAPITOL 

ROOM 3191 

SACRAMENTO, CALIFORNIA 

THURSDAY, SEPTEMBER 13, 2001 
9:11 A.M. 



438-R 



SENATE RULES COMMITTEE 
STATE OF CALIFORNIA 

HEARING 



CONSIDERATION OF THE REPORT OF CONTEMPT 
BY ENRON CORPORATION SUBMITTED BY SENATE 
SELECT COMMITTEE TO INVESTIGATE PRICE 
MANIPULATION OF THE WHOLESALE ENERGY MARKET 



STATE CAPITOL 

ROOM 3191 

SACRAMENTO, CALIFORNIA 



THURSDAY, SEPTEMBER 13, 2001 
9:11 A.M. 



Reported by- 



Evelyn J. Mizak 
Shorthand Reporter 



11 



APPEARANCES 

MEMBERS PRESENT 

SENATOR JOHN BURTON, Chair 

SENATOR ROSS JOHNSON, Vice Chair 

SENATOR BETTY KARNETTE 

SENATOR WILLIAM KNIGHT 

SENATOR GLORIA ROMERO 

STAFF PRESENT 

GREG SCHMIDT, Executive Officer 

PAT WEBB, Committee Secretary 

NETTIE SABELHAUS, Consultant on Governor's Appointments 

SUSIE SWATT, Consultant to SENATOR JOHNSON 

TIM SHELLEY, Consultant to SENATOR KARNETTE 

CHRIS BURNS, Consultant to SENATOR KNIGHT 

RYAN SHERMAN, Consultant to SENATOR ROMERO 

ALSO PRESENT 

SENATOR JOSEPH DUNN, Chair 

Senate Select Committee to Investigate Price Manipulation of the 

California Wholesale Energy Market 

LARRY DRIVON, Special Counsel 
Senate Select Committee 

MICHAEL L. KIRBY, Outside Counsel for Enron 
Post Kirby Noonan & Sweat 
America Plaza, Suite 1100 
600 West Broadway 
San Diego 

ROBIN C. GIBBS, Outside Counsel for Enron 

Gibbs & Burns 

1100 Louisiana, Suite 5300 

Houston, Texas 



Ill 



DENNIS R. MURPHY, Outside Counsel for Legislative Counsel 
Murphy Austin Adams Schoenfeld 
1000 G Street, Third Floor 
Sacramento 

BION GREGORY 
Legislative Counsel 

HEDY GOVENAR, Legislative Advocate 
Enron Corporation 



IV 

INDEX 

Page 
Proceedings 1 

Consideration of Report of Contempt 1 

Statements by SENATOR DUNN re: 

Voluntary and Subpoena Document 

Requests of Enron 1 

Inability to Access Depository 1 

Enron's Failure to Comply with 

June 14 , 2001 Subpoena 2 

Coercive Sanctions 2 

Suspension of Sanctions 3 

Current Debate 3 

Recommendation of Contempt Relates to 
Nonprivileged Documents Only 4 

Questions by SENATOR JOHNSON re: 

Meetings, Conversations, Held since 

Judge Kobayashi ' s Ruling 4 

Questions by CHAIRMAN BURTON re: 

Recent Conversation with Enron 

Executives 5 

Means of Determining Confidential and 
Nonconfidential Nature of Documents 5 

Need to Hear Enron' s Position 6 

Questions by SENATOR JOHNSON re: 

Legislative Counsel's Letter of 09/07/01 to 
Enron, Declining to Meet and Confer 7 



V 



Stonewalling 7 

Treatment of Enron vs . Reliant 7 

Degree of Supervision Assumed by Judge 8 

Questions by CHAIRMAN BURTON re: 

Who Makes Determination of Status of 

Documents 9 

Difference in Agreements between 

Generators 9 

Request to Hear from Enron Representatives 9 

Statements by MICHAEL KIRBY, Counsel for Enron 9 

Questions by CHAIRMAN BURTON re: 

Why Enron Should Be Treated 

Differently 10 

Protective Order 11 

Statements by SENATOR JOHNSON re: 

Representations of SENATOR DUNN When 

Seeking the Subpoena 11 

Questions by CHAIRMAN BURTON re: 

Issuance of Protective Order 12 

Confidentiality of Documents by 

Law or Opinion 12 

Statements by SENATOR DUNN re: 

Recommendation 14 

No Showing by Enron of Legitimately 

Confidential Documents 14 

Compromise Offer of 16 Priority 

Requests 15 



VI 



Enron Only Participant to Reject 

Compromise Offer 15 

Questions by SENATOR JOHNSON re: 

Recent Communications from Enron and 

Committee' s Response 16 

Enron's Protective Order Requires 

Dispute Resolution at Appellate Level 16 

Questions by CHAIRMAN BtJRTON re: 

Reason for Select Committee's Request 17 

Reason Enron Has Not Produced Any 

Requested Documents 17 

Enron' s Insistence on Protective Order 18 

Select Committee's Objection to Procedure 

Enron Has Set Forth 19 

Enron's Insistence that Select Committee 

Has Not Requested Nonconfidential 

Documents 20 

Questions by SENATOR JOHNSON re: 

Expansion of Request for Documents 20 

Has Staff Declined to Meet and Confer 20 

Enron ' s Lack of Showing of Trade 

Secret Status 21 

Expansion of Categories 21 

Questions by CHAIRMAN BURTON re: 

Why Should Enron Be Treated Differently 22 

Would Enron Agree Today to Same 

Agreement as Other Generators 23 



VI 1 



Questions by SENATOR JOHNSON re: 

Why Won't Select Committee Hammer Out 

Protective Order 24 

Enron Hasn't Produced Nonprivileged 

Documents for Six Months 24 

Questions by CHAIRMAN BURTON re: 

What Has Enron Produced 25 

Statements by DENNIS MURPHY, Counsel to 

Legislative Counsel 25 

Committee Never Advised of Documents in 
Sacramento Depository 25 

Inability to Gain Access to Documents 25 

Proper Process to Draft a 

Protective Order 26 

Statement by HEDY GOVENAR, Lobbyist for Enron 26 

Statements by LARRY DRIVON, Special Counsel to 

Select Committee re: 27 

Agreement with Other Generators and 

Reliant 27 

Questions by SENATOR JOHNSON re: 

Why Parties Haven't Met and Conferred on 
Protective Order 28 

Questions by CHAIRMAN BURTON re: 

Why Hasn ' t Enron Produced Any 

Documents 30 

Compromise Package Offer of 16 Priority 

Requests Vs . Previous Request 3 

Statements by BION GREGORY, Legislative Counsel, re: 

Service on Subpoena on 06/14/01 31 



Vlll 



112 Categories Requested Subsequently 

Reduced to 85 Categories 31 

Enron' s Refusal to Sign Agreement 31 

Statements by SENATOR JOHNSON re: 

Expansion of Categories 32 

Punitive Action 32 

Questions by CHAIRMAN BURTON re: 

Why Has Enron Refused to Give Any 

Documents to Select Committee 32 

Ability of Senate Staff to 

Access Depository 32 

Statements by MR. MURPHY re: 

Senate Never Told the Location of 

Enron's Depository or What Documents 

Were in Depository 33 

Statements by SENATOR DUNN re: 

Abatement of Sanction if Nonprivileged 

Documents Are Produced within Two Weeks 34 

Statements by CHAIRMAN BURTON re: 

Preference for Select Committee and 
Staff to Meet with Enron Counsel to 
Draft Protective Order 35 

Inclination to Vote for Contempt 35 

Suggestion to Begin Sanctions in 

Two Weeks 35 

Request by MR. MURPHY that Enron Agree to 

Produce Non- trade Secret Documents 36 

Statements by CHAIRMAN BURTON re: 

Committee Will Decide on Contempt 36 



IX 



Questions by SENATOR JOHNSON re: 

Additional Court Hearings Scheduled 37 

Hope for Agreement on Protective Order 37 

Statements by MR. GREGORY re: 

Clarification of Purpose of 

Upcoming Court Hearing 37 

Statements by CHAIRMAN BURTON re: 

Want Parties to Meet, Confer, and 

Come to Agreement 38 

Prepared to Find Enron in Contempt 39 

Recess until Call of Chair 39 

Certificate of Reporter 40 



P-R-O-C-E-E-D-I-N-G-S 
--00O00 — 

CHAIRMAN BURTON: Consideration and report of 
contempt by the Enron Corporation submitted by the Senate Select 
Committee, Senator Dunn. 

SENATOR DUNN: Thank you, Mr. Chair and fellow 
Members . 

I have a brief statement to read, then certainly 
welcome any follow-up questions to it as well. 

Let me start with just a little bit of 
background. Since the summer of 1998, California has been 
embroiled in an energy crisis involving incredible price 
increases in the electricity market. 

CHAIRMAN BURTON: We know all of that stuff. I 
think we're all up to date except for when we walked in the room 
this morning. 

Go ahead. 

SENATOR DUNN: Thank you, Mr. Chair. I'll cut 
right to the proverbial chase. 

We are in a position now, approximately five to 
six months after a first series of voluntary document requests 
were made to Enron, and several months post, the service of a 
legislative subpoena on Enron, and to this day we have not had 
access to any documents from Enron. 

I'll make one exception to that. They have, as 
we understand, established a local depository with approximately 
30,000 documents in it. We have tried over the past two weeks 
to get into it, but due to various circumstances, including the 



tragedy in New York, that has not occurred as of yet. • So, we 
cannot determine what is there. 

Simply put, as referenced in the actual report to 
the Floor from our' Senate Select Committee, we go through all 
the facts. We talk about all of what led us to today. Let me 
just get right to the recommendation, if I may. 

The Select Committee recommends that the Senate 
order and adjudge, or otherwise find Enron in contempt for its 
failure to comply with the legislative subpoena served on it on 
June 14th of this year. 

The Select Committee further recommends that the 
Senate consider the imposition of coercive sanctions as 
necessary and appropriate to compel Enron to comply with the 
subpoena. 

The Select Committee has previously suggested by 
way of example a course of sanctions which would fine Enron 
$1,000 on the first day following the Senate order, with 
progressive fines for each subsequent day an amount double that 
of the preceding. 

I've recently received communication from 
Professors Thomas Maine and Clark Kelso, the Capital Center for 
Government Law and Policy over at McGeorge, and based on the 
recommendation of their report, I recommend that we amend that 
original recommendation now to reflect a coercive sanction in 
the amount of $1,000 for the first day of noncompliance, with 
the fine doubling each subsequent day for the first ten days 
noncompliance, and the fine increasing thereafter at the rate of 
one million dollars per day for each subsequent day of 



1 noncompliance after 10th day. 

2 I'd like to make a further recommendation, if I 

3 may, that the sanctions be subject to suspension at such time as 

4 the Chair of the Select Committee is provided a declaration 

5 under penalty of perjury by the Chief Executive Officer of Enron 

6 stating that Enron has achieved full compliance of the subpoena 

7 by producing all documents that are not privileged and producing 

8 the privileged logs specifically identifying each document for 

9 which Enron claims a privilege, along with the description of 

10 the nature of the privilege claimed for such document. 

11 The declaration must further state that Enron 

12 will comply with any protective order in effect as to the 

13 privileged documents. 

14 It should further state that Enron will comply 

15 with the rulings of the Select Committee should no protective 

16 order be in effect. 

17 It is further recommended that should the 

18 declaration be demonstrated to be incomplete or inaccurate, the 

19 coercive sanctions be reinstated as of their suspension date and 

20 continued until Enron has demonstrated it is in full compliance 

21 with the subpoenas and any existing court order with respect 

22 thereto. 

23 Let me summarize to today what the current debate 

24 is, very briefly, Mr. Chair and fellow Members. As you know, 

25 there was legal action initiated by Enron several months ago, 

26 and there were recent court rulings. One of the rulings is, I 

27 don't think, important for our hearing this morning, and that is 

28 the Motion to Quash, which the Court ruled in our favor. 



1 With respect to the protective order, the Court 

2 ruled that in fact Enron was entitled to a protective order. 

3 Our recommendation as to the contempt relates to 

4 the nonprivileged' documents that would not be subject to any 

5 protective order as addressed the by the Court. 

6 SENATOR JOHNSON: On that issue, what 

7 conversations have been held? What meetings have been held 

8 since the Judge's ruling that the Senate was entitled to the 

9 information but that Enron was entitled to a protective order? 

10 What conversations have been held, and who have been the 

11 participants? When were they held to implement the Judge's 

12 finding that they were in fact entitled to a protective order? 

13 In other words, has there been an effort to reach 

14 a meeting of the minds on the nature of that protective order? 

15 SENATOR DUNN: I'll be happy to respond to that 

16 question. And certainly, after my comments, Senator Johnson, I 

17 welcome both Special Counsel, Larry Drivon to the Select 

18 Committee, as well as our outside counsel and Legislative 

19 Counsel who are here to offer. The reason I do that is because 

20 everybody's been involved. 

21 Thank you, Mr. Chair. 

22 There have been numerous conversations and 

23 correspondence going between the Committee, the Committee's 

24 Council, Legislative Council, outside council and Enron's 

25 representative, Mr. Michael Kirby, whom I believe is here today 

26 as well. 

27 Basically what it boils down to, Senator Johnson, 

28 at least from my perspective, is the position, until a 



27 



28 



conversation with corporate Enron executives this morning with 
myself and Mr. Drivon, that Enron was maintaining the position 
they would not produce any documents until that protective 
order — 

CHAIRMAN BURTON: What happened with the 
conversation you had this morning? 

SENATOR DUNN: They will not produce any 
confidential — now, I want underscore the word confidential 
because I'll come back to it in a minute, underscore, Mr. Chair 
and fellow Members — any confidential documents until a 
protective order is hammered out. 

Remember what I said. Our contempt 
recommendation relates to nonprivileged documents. It doesn't 
relate to anything that's covered by the Court ruling. 

CHAIRMAN BURTON: It almost seems like we're in a 
chicken and egg situation, I guess. • 

How is it going to be determined what is the 
non-whatever, the sanctionable, nonconfidential, non-trade 
secret stuff? 

SENATOR DUNN: I'm happy to answer that, 
Mr. Chair. 

The procedure is set out very clearly in the 
Code. If in fact Enron believes that they have documents that 
are subject to a privilege, they are entitled to withhold those 
documents and submit a log identifying those documents for which 
we can then determine whether in fact the claim of privilege is 
correct . 

As to any other nonprivileged documents, which is 



really the subject of our contempt, we've never gotten those 
documents . 

CHAIRMAN BURTON: So, you're asking for 
everything in the world. They have an opportunity to say, you 
can have everything in the world, but you can't have this stuff 
over here. 

SENATOR DUNN: That's correct. That stuff over 
there is what was subject to the court order, correct. 

Can I make one distinction though, Mr. Chair, 
10 because it's important. 

The difference is between what they claim to be 
confidential and what they claim to be subject to legitimate 
legally recognized privilege. The issue here is, the Court said 
and addressed their focus to anything they claim there's a 
15 legally recognized privilege. 

Whatever they claim to be confidential, a 
different and much broader word that does not have any legally 
i recognized description, is what they're claiming they won't 
1 ! produce until that protective order is — 

CHAIRMAN BURTON: I'll tell you how I would like 
to do this. We're kind of familiar, I think the Members of the 
Committee are, with the Committee's position. 

We're not familiar with Enron's position. I 
would kind of like them to come up and tell us why not. Then 
25 you can come back, Senator. 

Senator Johnson. 

SENATOR JOHNSON: If I could just ask, thank you, 
Mr. Chairman, apparently our Leg. Counsel wrote to 









1 representatives of Enron on the 7th of September saying, "We 

2 decline your in invitation to meet and confer regarding a 

3 protective order." 

4 Although your letter referenced Reliant, so that 

5 leads to two questions. One, it appears to me that we've been 

6 stonewalling an opportunity to sit down and discuss a protective 

7 order, not withstanding that a judge in the Superior Court said 

8 they were entitled to such a protective order. 

9 The second question that this raises in my mind 

10 j is, are we treating Reliant somehow differently than we're 

11 proposing to treat Enron? 

12 The Judge has said they're entitled to a 

13' protective order, and my understanding is, they've said, "Let's 

14. sit down and hammer out the specifics of that." 

15 It's my further understanding that Enron has 

16 indicated that they're willing to accept a protective order 

17 under the same conditions as have been granted to Reliant, with 

18 the additional caveat that since the Judge has now taken charge 

19 of this issue, that it be under his approval as well. 

20 If that's incorrect, where? 

21 SENATOR DUNN: It is incorrect, Senator Johnson, 

22 and let me address the several points that you raised. 

23 But I want to underscore that still, even though 

24 we're going to talk about the protective order issue, that has 

25 nothing to do with the nonprivileged documents that they've 

26 never been willing to produce. I keep underscoring that. 

27 But let's get to the protective order. 

28 Certainly, Leg. Counsel is here, the author of the letter. 



8 

1 It is not that we are stonewalling them. I 

2 respectfully disagree with your representation there, Senator 

3 Johnson. What we have said to them is, until such time, as the 

4 Code requires, you come forward and establish legitimate trade 

5 secret documents, then and only then are you entitled to that 

6 protective order as indicated by the Court. 

7 At no time has Enron come forward to say, "Joe, 

8 these boxes over here are our trade secret documents and here is 

9 why." And they're not required to show them to us, but here's 

10 why. 

11 If they do that, and in fact establish they are 

12 legitimate trade secrets as recognized under the law, then they 

13 are entitled to the protective order. That we agree. 

14 SENATOR JOHNSON: What degree of supervision over 

15 that issue has been assumed by the Judge in that case? 

16 SENATOR DUNN: What the Court said was — 

17 SENATOR JOHNSON: He said that they're entitled 

18 to a protective order. 

19 SENATOR DUNN: Yes. 

20 SENATOR JOHNSON: Doesn't he retain some ability 

21 to define the parameters of that protective order? 

22 SENATOR DUNN: The issue to that — I'm certain 

23 in the Court's mind, yes. But what we're saying, Senator 

24 Johnson, is, and this is not inconsistent with the Court at all, 

25 but very consistent with the Court. 

26 We are ready to discuss those terms of protection 

27 if, as the Code requires, you come forward and establish 

28 legitimate trade secret status for a certain subset of 



1 documents. 

2 CHAIRMAN BURTON: So, what we're asking is, they 

3 give us all of this stuff and that's okay. They've got all of. 

4 this stuff, and that goes into a locked box. 

5 And then who makes the determination if there's a 

6 dispute, the Judge, an arbitrator, or what? 

7 SENATOR DUNN: As the agreement with the other 

8 market participants is, if there's a dispute over that trade 

9 secret status, they can go to court. 

10 CHAIRMAN BURTON: Nothing happens until a court 

11 renders its decision? 

12 SENATOR DUNN: Correct, and exactly why I keep — 

13 CHAIRMAN BURTON: What's the difference between 

14 this deal and any of the other generators? 

15 SENATOR DUNN: The answer is, as indicated here, 

16 it's none. 

17 CHAIRMAN BURTON: I'd like to hear from Enron and 

18 see why they should be treated different. I know why they 

19 should be treated different, but why they should be treated 

20 better. 

21 Please identify yourselves. 

22 MR. KIRBY: Good morning, Mr. Chairman. Michael 

23 Kirby, appearing as counsel on behalf of Enron. 

24 MR. GIBBS: I'm Robin Gibbs on behalf of Enron, 

25 outside counsel as well. 

26 CHAIRMAN BURTON: You're house counsel, outside 

27 counsel or what? 

28 MR. KIRBY: Outside counsel. 



10 



Your Honor, I'll address the questions. 

CHAIRMAN BURTON: Good. 

MR. KIRBY: Because there's a serious 
misconception being created here. 

When this process started, subpoenas were served, 
and there was 112 categories of documents in each subpoena, 
which called for literally millions of documents. 

At a meeti-ng in this Capitol on June 19th that I 
attended, Mr. Drivon, as Special Counsel for the Committee, 
said, the Committee doesn't want all of these documents. For 
example, the very first -- I'll just give an example, 
Mr. Chairman. The first category is, all of Enron's 
transactions with Cal ISO last year. 

We have offered repeatedly in writing to give 
them all of those documents. It's over a million documents. And 
they said, we don't want that. We don't need that. 

CHAIRMAN BURTON: Why should you be treated 
differently than the others? 

MR. KIRBY: We're not being treated different. 
But the Court -- the problem is, Senator, is that the Select 
Committee refuses to do what Judge Kobayashi ordered them to do. 

CHAIRMAN BURTON: What did he order them to do? 

MR. KIRBY: He ordered them, your Honor, he 
granted the motion that said Enron is entitled to a protective 
order. And on the day of that ruling, and on every day since -- 

CHAIRMAN BURTON: So explain to me, if you can, 
explain to me. All right, there's a protective order. You want 
a protective order. 



11 



1 What's wrong with you saying, "Here's this stuff; 

2 here's this stuff. We think it should be protected," and you 

3 get a protective order on that? You want a protective order 

4 before you give anything or what? I'm trying to figure out the 

5 problem here. 

6 MR. KIRBY: The protective order provides for 

7 exact -- but if I can give the context. 

8 The Senate Committee limited its request in 

9 writing. And every one of these yellow tabs right here -- I'm 

10 not going to go through them for you — 

11 SENATOR JOHNSON: Just on that narrow point. 

12 That's entirely consistent with the representations that Senator 

13 Dunn made to this Committee when he obtained the subpoenas. 

14 Because I raised the issue at that time, my God, are we going on 

15 just a fishing expedition, asking for everything? He said no; 

16 we're going to narrow in on those documents that we consider to 

17 be of the highest priority. 

18 . To indicate that there was a meeting this summer 

19 in which the staff, or the Special Counsel said, no, we're not 

20 interested in all of this, is entirely consistent with what 

21 j Senator Dunn represented to this Committee in seeking the 

22 subpoena. 

23 CHAIRMAN BURTON: That was then; this is now. 

24 s What I'm trying to do is find out, it seems to 

25 me, because I'm just a city lawyer. 

26 MR. KIRBY: I'm just a country lawyer. 

27 CHAIRMAN BURTON: Yeah, that's what I was afraid 

28 of. 



12 

[Laughter. ] 

CHAIRMAN BURTON: So, you've got two boxes of 
stuff. This stuff's okay. This stuff is questionable, and we 
think there's a problem with that from the standpoint of 
confidentiality, trade secrets, blah-blah-blah. 

So, you give that stuff to the Select Committee. 
This is under a locked box; this is open for everybody to see 
it. 

At that time, as I understand it, they would then 
issue their protective order on stuff that is found to be 
protected. You know, when the bottom line gets to it, I guess 
by a judge. 

How would you want to do it? 

MR. KIRBY: Your Honor, what we have proposed in 
the protective order that we have submitted to them, it 
tracks -- a, the Court says the protective order shall be 
entered, and that's fine with us. 

The 16 categories, which they have limited their 
request to, and if you look at the contempt report, it is 
specific to the 16 categories, which are all confidential 
documents . 

The protective order creates a procedure — 

CHAIRMAN BURTON: It is all confidential 
documents in your opinion. By law or in your opinion? 

MR. KIRBY: We submit as was -- we are submitting 
an index. A protective order is entered, and it outlines the 
procedure . 

And Senator Johnson, I have sent three letters 



13 

1 and made number of calls, and their response is, we will not 

2 discuss it with you. There's nothing I can do -- I've sent four 

3 letters now, I think, saying, "Sit down with us and work out the 

4 protective order." And as the Senator reported, they told me on 

5 the phone and they say, "At this time we decline your invitation 

6 to meet and confer regarding a protective order." 

7 I can't get the protective order done if they 

8 will not meet with us. 

9 The issue, Mr. Chairman, is, the procedure is in 

10 the protective order. We identify documents that we contend -- 

11 we give them an index. If they dispute that, the procedure can 

12 get handled. We were required to meet and confer. If it can't 

13 be worked out, we go to court. 

14 Just as of -- Mr. Chairman, the issue today is, 

15 they have never, after June 19th, asked for all of these 

16 documents. They now say they want the documents, and we have 

17 told them, if you want all those documents, we'll start 

18 producing them. You've told us before you don't want them. You 

19 want to limit it to the 16 confidential categories. 

20 The issue is, they want us to give up the court 

21 protective order that Judge Kobayashi granted. That's the 

22 dispute today. We are willing — 

23 CHAIRMAN BURTON: Senator Dunn-, can you get up 

24 here so we can kind of cut to the chase on this. 

25 I'm missing something. I'm really missing 

26 something. 

27 SENATOR DUNN: Yes. 

28 CHAIRMAN BURTON: I don't want to get into who 



14 



shot John. 

SENATOR DUNN: Understood. 

CHAIRMAN BURTON: How would you do this? How 
would do this? 

SENATOR DUNN: Okay. This is what — what we're 
getting to the dispute of is what I identified before, and it's 
the difference between privileged documents and that -- 

CHAIRMAN BURTON: But somebody else's going to 
decide that. You ain't going to decide it, and they ain't going 
to decide it. 

SENATOR DUNN: No, I understand that. 

CHAIRMAN BURTON: I want to understand what 
procedure are you looking for to get to — 

SENATOR DUNN: Providing them protection? 

CHAIRMAN BURTON: I guess so, or getting us out 
of the middle of this, whatever. 

SENATOR DUNN: We don't want to be in the middle 
of it at all. 

As far as the protection is concerned, our 
position has always been clear. 

CHAIRMAN BURTON: It'd be helpful if you listen 
to this, unless you know the answer. 

SENATOR DUNN: When you make a showing that you 
have legitimate trade secret documents, you are now entitled to 
protection for those documents. And when that showing has been 
made, we will then sit down with you and try to negotiate a 
protective order. 

But there has been no showing. 



15 



CHAIRMAN BURTON: For the documents that have 
been determined either mutually or by the outside party, which I 
guess would be a judge, to be within the scope of the protective 
order — 

SENATOR DUNN: Whatever the procedure may be; 
that's correct. 

CHAIRMAN BURTON: I assume when it's all over, 
that'd be the procedure. 

SENATOR DUNN: I suspect ultimately a market 
participant like Enron would go to the court after we've 
followed the procedure. 

CHAIRMAN BURTON: Or, I guess -- 

SENATOR DUNN: Could I interrupt on second, 
Mr. Chair, if I may. 

CHAIRMAN BURTON: Sure. 

SENATOR DUNN: The issue of the 16 priority 
requests, let us clarify this, because this "is very important. 
The 16 priority requests were made as a compromise offer, as 
part of a compromise offer, to all market participants. There 
were other terms of it. 

Enron has consistently and still is rejects the 
terms of that compromise offer that every other market 
participant accepted. As a result, we have no choice but to 
zero in on the full subpoena. 

Now, what I had said, Senator Johnson, at the 
earlier hearing in requesting that subpoena was, those 112 
themselves are narrowed and relevant, and I even gave to you our 
footnoted request indicating that. 



16 



SENATOR JOHNSON: With the reasons, yes, I 
recall . 

SENATOR DUNN: Yes, that's correct, Senator 
Johnson. 

SENATOR JOHNSON: You indicated at that time, if 
memory serves, that the sheer volume of materials requested was 
such that you weren't really going to seek all of this; that you 
were going to attempt, at a staff level, to prioritize — 

SENATOR DUNN: Correct. 

SENATOR JOHNSON: — and work through those 
documents. 

Another question that I have is, did Enron 
communicate to you within the last day or two a specific 
suggested protective order, and what has been the response to 
that? 

SENATOR DUNN: Yes. Yesterday afternoon, I got a 
fax from Michael Kirby with a 14-page proposed protective order. 
At the same time, I got representation from their lobbyist here 
that they were willing to agree to what the others agreed to. 

When you put the protective order from Mr. Kirby, 
compared to what the other market participants agreed to, there 
is a vast difference, and I'll give you one example. 

Mr. Kirby *s protective order said, if there is a 
dispute, they will produce nothing until it's fully resolved at 
the appellate level. 

CHAIRMAN BURTON: Nothing about the issue that is 
in dispute, or nothing about the name of the secretary to the 
President of the company? 



17 



SENATOR DUNN: Anything they claim confidential. 
Notice the distinction. 

MR. KIRBY: Just disputed items. You're right, 
Mr. Chairman. Just the disputed items. 

We have offered to produce — 

CHAIRMAN BURTON: The thing is, they claim 
confidential and you don't, you could end up in court, hot or 
cold; right? 

SENATOR DUNN: But again, Mr. Chair, the issue 
that comes before this Committee has nothing to do with claimed 
privileged documents. It has to do with the non — 

CHAIRMAN BURTON: The issue before the Committee 
that's asking us to do something, and we want to know why we're 
doing it, Senator. That's the issue. 

SENATOR DUNN: And Mr. Chair, the answer is 
because Enron hasn't produced the nonprivilege documents subject 
to the subpoena. 

CHAIRMAN BURTON: Why not? 

MR. KIRBY: Because the subpoena was specifically 
limited to the 16 categories of confidential documents. And he 
says why we're here today, look at the contempt report. It 
specifically provides the priority documents. It's always, 
since June 19th -- 

CHAIRMAN BURTON: So, everything that they want 
you say is privileged? 

MR. KIRBY: It is confidential. And the other 
point we have, your Honor -- 

CHAIRMAN BURTON: Not all that stuff's 



confidential . 

MR. KIRBY: The other point we have, your Honor, 
is there's two levels of confidentiality. One of them is the 
documents which we' are still going to produce under the 
protective order. 

But what you're hearing today is, according to 
Senator Dunn, we don't get a protective order now or later until 
they look at the documents or have a dispute. 

CHAIRMAN BURTON: Well, they cannot — 

MR. KIRBY: The Court said we are entitled to a 
protective order now. And as soon as we get that order 
entered, we can start producing confidential documents in the 16 
categories. 

CHAIRMAN BURTON: Two questions. 

Are you asking for stuff that you really didn't 
want to bust their chops because they aren't being cooperative? 

SENATOR DUNN: No. So you know, Mr. Chair, we 
have reduced the 112 to 85. We took out about 29-30 of the 
requests . 

CHAIRMAN BURTON: Why would you ask for stuff 
that you didn't want? 

SENATOR DUNN: When those first requests were 
made back in March, we were in a rather steep learning curve on 
what would be necessary — 

CHAIRMAN BURTON: But now you think — 

SENATOR DUNN: That's correct. 

CHAIRMAN BURTON: Second thing is, explain to me 
what is wrong with the procedure they set forth, just so I 



19 



understand it. 

SENATOR DUNN: As far as the claim of privilege? 

CHAIRMAN BURTON: As far as the confidentiality 
order . 

I think the question is, do you do it today, or 
do you do it a week from today after something happens. 

Tell us what's wrong with it as they proposed it. 

SENATOR DUNN: In their proposed protective order 
there are significant problems to it, okay? Such as, when we 
can produce documents, not produce documents — 

CHAIRMAN BURTON: Hold on. 

When who could produce them? 

SENATOR DUNN: I'm sorry, when Enron. 

CHAIRMAN BURTON: Go for it. 

MR. KIRBY: Mr. Chairman, that's exactly why we 
have asked every day since Judge Kobayashi -- 

CHAIRMAN BURTON: Forget that stuff. Go for the 
deal. 

MR. KIRBY: We'll sit down with them right now, 
your Honor, and finish this protective order today and get Judge 
Kobayashi to sign it and start producing documents next week, if 
they will simply get the protective order that Judge Kobayashi 
ordered be entered done. 

CHAIRMAN BURTON: Give me the second one. 

SENATOR DUNN: Before I get to that, again, as 
I've been stressing from the beginning, our request on contempt 
has nothing to do with documents covered by a protective order. 
They have to do with the nonprivileged documents that Enron to 



20 



this day has not produced. 

MR. KIRBY: Let me respond to that, because they 
have not requested these nonconfidential documents until last 
Friday, after Judge Kobayashi ruled. 

I would defy the Committee to show us one 
document since June 19th that asks for anything except the 16 
priority categories. 

Every one of these yellow tabs is a request only 
for the priority categories that are covered by a protective 
order. 

SENATOR JOHNSON: And that expansion occurred at 
a time when the Committee and our Legislative Counsel was 
declining to meet with Enron to discuss the terms of a 
protective order? 

MR. KIRBY: That is correct. 

SENATOR DUNN: No, Senator Johnson, no. That's 
not correct. 

They rejected the compromise offer of the 16 
priority requests. 

SENATOR JOHNSON: Wait, Senator Dunn. I just 
read from a letter from Leg. Counsel that was dated September 
7th, "At this time we decline your invitation to meet and confer 
regarding a protective order." 

Now, is it true that the staff of the Select 
Committee and Leg. Counsel have, since the Judge's order, 
essentially declined to comply, essentially declined to enter 
into a meet and confer process on the designing of a protective 
order? 



21 

SENATOR DUNN: No. We have simply insisted that 
they first show the trade secrets — 

SENATOR JOHNSON: What meetings have been held? 

SENATOR DUNN: There haven't been any direct 
meetings because they have refused to show, make a showing of 
trade secret status. 

SENATOR JOHNSON: To me, that's stonewalling. 
That's refusing to — 

SENATOR DUNN: It's what the Code requires, 
Senator Johnson. 

SENATOR JOHNSON: — to meet with them. 

And if, contemporaneously, the list of 16 
categories of documents was then expanded to 35, that really 
calls into question the fairness of the process that the Select 
Committee is going under. 

SENATOR DUNN: Senator Johnson, it was — 

SENATOR JOHNSON: I don't have any particular 
case to make or ax to grind for Enron. They may be the worst 
people in the world, but they're entitled to a fair process. 

SENATOR DUNN: Agreed. 

SENATOR JOHNSON: I'm really questioning the 
timing of that, the expansion of the categories and so on. 

Why not simply sit down, meet and confer, and 
come up with a protective order? 

SENATOR DUNN: Senator Johnson, one, we never 
expanded it. They rejected the compromise offer of the 16 
priority requests first. They rejected that. 

Now, if I may finish -- 



22 



SENATOR JOHNSON: While seeking a protective 
order. 

SENATOR DUNN: No, they never said we're willing 
to do that as part of the package the other market participants 
have accepted. 

And more importantly, what — the issue of the 
protective order, I can't stress this enough, the protective 
order, whether hammered out at this table or in a court several 
weeks down the line, only covers a subset of privileged 
documents . 

Enron in this contempt has only to do with those 
documents that Enron has not produced that are not part of a 
claim of privilege, -underscore the word privilege, versus 
confidentiality. 

CHAIRMAN BURTON: You never did answer why you 
should be treated different than the other generators. 

MR. KIRBY: Mr. Chairman we're not asking to be 
treated different. 

CHAIRMAN BURTON: Yes, you are. They agreed to a 
process that you're resisting. 

MR. KIRBY: We, your Honor, went to court for a 
protective order because the alternatives submitted by the 
Select Committee was, you either give us all of your 
confidential trade secret documents or we'll find you in 
contempt and fine you billions of dollars. 

If you look at the report from Senator Dunn, he 
said, he told us, if you have to go to court to protect your 
legal rights, that's your right. 



23 



And he's also on record in the Reliant contempt 
hearing as saying, you cannot hold anyone in contempt for 
asserting their valid legal rights. 

Judge Kobayashi has said — 

CHAIRMAN BURTON: Let's get back to my question. 

Would you agree today to the same protective 
order procedure as the other generators; yes or no? It's 
simple. 

MR. KIRBY: Your Honor, yes, we submitted a 
protective order yesterday that -- 

CHAIRMAN BURTON: No, no, no, no. That is not 
the question. That's not the question that I asked. You don't 
have to say yes, you don't have to say no. 

Would you agree to the same protective orders 
that -- how many generators have signed it? 

MR. DRIVON: Seven. 

CHAIRMAN BURTON: — that the other seven did, or 
not? 

MR. KIRBY: There's a difference. You say, your 
Honor, the protective order. It is not a protective order. 

CHAIRMAN BURTON: As much as I enjoy it, I ain't 
a judge. I do not have the Latin for judge, and I'm going to be 
a coal miner instead. 

MR. KIRBY: Senator Burton, no other generator 
has a protective order. They have an informal agreement which 
has no enforcement, and that's what Judge Kobayashi ruled, is 
that there is no remedy if someone's trade secrets are leaked to 
the press. We are entitled to a protective order. 



24 



CHAIRMAN BURTON: So, they're all stupid for 
having entered into those agreements, or they've got nothing to 
hide? 

I'm missing something. I'm missing what sets 
you — 

MR. KIRBY: I'm only here to represent Enron. I 
can't comment on what guided somebody else. 

All I know is what Judge Kobayashi said, is that 
Enron is entitled to a protective order. 

What we have done — 

CHAIRMAN BURTON: And they're saying they'll give 
you a protective order. 

MR. KIRBY: Well then, your Honor, let's sit down 
and finish it. 

SENATOR JOHNSON: This is about a contempt. 

It seems to me that Senator Dunn is telling us, 
yeah, he's willing to do it. You're telling us you're willing 
to do it. 

I don't know what we're here considering a 
contempt and penalties, and so on. Why don't you, before the 
sun sets today, hammer out a protective order? 

SENATOR DUNN: Because, Senator Johnson, this 
contempt has nothing to do with privileged documents subject to 
a protective order. 

It has everything to do with six months have gone 
by, and Enron has not produced its nonprivileged documents 
subject to the subpoena. That's what we're here about. 

CHAIRMAN BURTON: What have you not — have you 



25 



produced anything? 

MR. KIRBY: Mr. Chairman, there are 33,894 
documents in a depository in Sacramento, and now I think the 
number's up to 49,000, that until — until Judge Kobayashi 
ruled, this Committee never even asked to look at them. They 
never asked to look at them. 

CHAIRMAN BURTON: Hold on for a minute. 

Dennis, and identify yourself. 

MR. MURPHY: I'm Dennis Murphy. I'm Special 
Counsel hired by Leg. Counsel. 

The Committee was never advised. They were 
advised that there was a place rented, and they intended to put 
documents in there. They were never advised there were 
documents in there, and they were never advised where this 
repository was until the lawsuit had occurred, and we received 
that information in a declaration filed in conjunction with the 
lawsuit . 

And a compliance with the subpoena doesn't mean 
we have to go search out somewhere in Sacramento and find 
documents . 

We still have been trying for a week to get into 
that depository and have been unable to, to verify what is the 
nature of the documents in there. They have not allowed our 
people in there to verify what documents are in there, as of 
this point. 

And as to Senator Dunn's other point, I'd like to 
read a letter dated today from Enron. We're talking about the 
nonprivileged documents. The first sentence says, "Enron is 



26 

willing to produce the out-of-state nonconfidential, non-trade 
secret documents called for by the Senate Select Committee 
subpoena. In return," not we will just produce it, "In return, 
you have to agree to the protective order Mr. Kirby has 
submitted to the Court." 

And the protective order Mr. Kirby has submitted 
to the Court, under the proper process, would be, he submits it 
to us. We submit to him our objections. He submits back his 
response to our objections. We come to an agreement and submit 
it to the Court. 

We received this yesterday. 

CHAIRMAN BURTON: That's a point. In other 
words, you'll give them the documents if they agree to stop the 
contempt hearing, and then agree to the entry of something you 
wrote for the benefit of your client. That doesn't really make 
a hell of a lot of sense. 

Would you agree to the one that they write in? 
Probably not. 

MR. KIRBY: Mr. Chairman, I don't think there's 
been any serious dispute — 

CHAIRMAN BURTON: Have you got a comment here? 

MS. GOVENAR: I do. 

CHAIRMAN BURTON: Identify yourself. 

Hedy Govenar, representing Enron. 

Another lobbyist and I had a conversation with 
Senator Dunn, who was very generous with his time yesterday. He 
suggested the way that that letter wrote read, the protective 
order that we discussed was the Reliant protective order, along 



27 



with the line that basically put Judge Kobayashi in the mix of 
that, as his order was. 

That's why that letter was written that way, 
because we were trying to be responsive to Senator Dunn's 
points, and that's the result of that. 

CHAIRMAN BURTON: I would say one thing. If it 
was a protective order that they gave to Reliant, probably would 
have been better to say the same protective order. 

You shook your head about something. What? 

MR. DRIVON: Senator, I'm Larry Drivon, Special 
Counsel to the Committee. 

The agreement with the other generators, and as 
most specifically set forth in the Reliant thing, there is a 
complete procedure — 

CHAIRMAN BURTON: Is that a legal term? 

MR. DRIVON: Yeah. It's in the same book as this 
stuff and that stuff. 

CHAIRMAN BURTON: Right. I'm not a lawyer. 

MR. DRIVON: I've been accused of same problem. 

There is a procedure there that tracks the 
California law and reserves to the market participant the right 
to go to Superior Court in case there is a dispute that cannot 
be resolved. That's what it does. 

And we have offered exactly the same -- 

CHAIRMAN BURTON: What does theirs do? 

MR. DRIVON: What theirs does, Judge, is -- 
[Laughter] 

SENATOR JOHNSON: And I thought he didn't get 



28 



along with the Governor. 

CHAIRMAN BURTON: If I could make my eyebrows go 
up and down, I'd really feel good. 

MR. DRIVON: That was an expression to Judge 
Johnson. 

CHAIRMAN BURTON: What did you know and when did 
you know it? 

[Laughter. ] 

MR. DRIVON: Their proposed protective order has 
been completely looked at by Mr. Murphy. 

CHAIRMAN BURTON: That explains the difference 
between the two. Now tell me the difference between the two. 

SENATOR JOHNSON: Wait. Just on that narrow 
point. I've asked half a dozen times, why hasn't there been an 
effort to meet and confer, instead of exchanges of letters and 
changes of documents? And you have one interpretation; they 
have another interpretation. 

Why in the world haven't you sat down, the 
relevant parties, around a table and hammered out an agreement? 
You should be involved in a meet and confer process. And they 
are entitled, so the Judge said, to a protective order. Why 
hasn't that happened? 

SENATOR DUNN: Senator Johnson, first, we have 
been meeting for almost six months, including Enron, in trying 
to do this. 

With respect to now, Senator Johnson, our 
position simply tracks the Code. Once you make a showing of 
trade secret status, then you're entitled to the protective 



29 



order. 

They have not followed the Code and come forward 
to try to make any showing on trade secret status. 

SENATOR JOHNSON: Again, I don't have a 
particular bias in favor or against Enron, but I do think that 
fairness is important. And it smacks at this point of their 
being punished for having exercised their rights to go to court 
and to have achieved in court at least a partial victory in the 
sense that the Judge said they were entitled to a protective 
order. 

And if, as has been indicated, the number of 
categories expanded from 16 to 35 suddenly, when all summer you 
weren't asking for the 35 categories, that smacks to me of, you 
know, a little payback for them having had the temerity to go to 
court . 

And I have to wonder as well what will be the 
reaction of Judge Kobayashi to this. The la'st thing we want to 
see is some brouhaha — 

SENATOR DUNN: No one wants that. 

SENATOR JOHNSON: Between the judicial branch and 
the legislative branch. 

SENATOR DUNN: Senator Johnson, you're absolutely 
right on that last point. 

But it's exactly why I continually stress here, 
this dispute over the protective order is not at issue before 
this Committee. 

What's at issue before this Committee is the fact 
that since April, Enron has not produced its nonprivileged 



30 



documents . 

CHAIRMAN BURTON: Okay, why not? When you get 
down to it, they are asking that you be held in contempt for not 
giving us the documents that tell who the Chief Executive 
Secretary is, all right? Stuff that isn't privileged. 

Why haven't you given anything? 

MR. KIRBY: Because, Mr. Chairman, they 
specifically said, starting on June 19th, that Friday, that they 
don't want anything but the 16 priority categories. 

CHAIRMAN BURTON: What about that? 

SENATOR DUNN: The priority request that we gave 
to the other market participants were part of a compromise 
package, Senator Burton. 

CHAIRMAN BURTON: They said that you said — 

SENATOR DUNN: That's true. The offer was made 
at that time to every market participant. If you do these three 
things, including the 16 requests, that we will not move forward 
with contempt. 

CHAIRMAN BURTON: Okay, fine. 

SENATOR DUNN: They rejected that. 

CHAIRMAN BURTON: So then, when did you ask them 
for the other stuff? 

SENATOR DUNN: You mean the full subpoena? 

CHAIRMAN BURTON: Whatever it is that we're 
holding them in contempt for not giving. 

SENATOR DUNN: When they rejected, they have 
always -- 

CHAIRMAN BURTON: Joe, I need a date. I wasn't 



31 



there . 

SENATOR DUNN: The first time — 

MR. GREGORY: June 14th the subpoena was served. 

SENATOR DUNN: That's correct. 

MR. GREGORY: Bion Gregory. 

On June 11th, you authorized the issuance of the 
subpoena. It was served on June 14th, 112 categories of 
documents. That has since been reduced to 85 based on 
objections made by Enron at a meeting before the Select 
Committee. That's one path. That's the issue before the 
Committee today. 

Now, as happens in a lot of the matters and so 
forth, what the Select Committee said is, in lieu of complying 
with the subpoena, if you would give us a priority list of 
documents and sign a confidentiality agreement, and a depository 
agreement, and with the latest Reliant thing there's a side 
agreement on that, you don't need to comply with the subpoena. 
We'll deem that you've complied if you have provided us with the 
16 categories and signed this procedure, and stuff like that. 

The other generators have done that. Enron to 
date has refused to do that, and so forth, so we're back under 
the subpoena again. 

SENATOR JOHNSON: As a Member of this Committee, 
and one who voted for the subpoenas, the representation at the 
time Senator Dunn and counsel to the Select Committee was — 
because I raised the objection, are we casting just this wide 
net, you know, going on a fishing expedition? And Senator 
Dunn's response was, and Counsel's response was, that no. We 



32 



did not anticipate in any sense that we were going after all of 
the documents contained in the subpoena, but that at that point, 
they weren't quite sure what they wanted, but he was sure that 
that would be dramatically reduced. 

Now, what we're hearing is that all summer long, 
it's provide us with 16 categories of documents. And Enron's 
position was that those categories were confidential. 

And again, Senator Dunn, with all respect, I come 
back to, it seems that this has changed since Judge Kobayashi's 
order. And I can't help again but wonder if that's punitive; if 
we are suddenly deciding, all right, we are going to, by God, 
slap these people down because they had the temerity to get a 
judge to agree with them that they were entitled to protective 
order. 

And even, Joe, even if the argument that you've 
been constructing, that this is separate and apart from that, I 
still can't understand why there has been a reluctance since the 
Judge ruled to have a meet and confer process to talk about that 
protective order. 

CHAIRMAN BURTON: While they're thinking, again, 
why haven't you given them anything? 

MR. KIRBY: Mr. Chairman, we started putting the 
nonconfidential documents in that depository, and on June 
19th -- 

CHAIRMAN BURTON: Did you tell them where it was 
and say "here's the key"? 

MR. KIRBY: We told them where it was. We gave 
them the address of it in Sacramento. It was discussed on 



33 



July 11th, 2001, when we had the original contempt hearing. 

They have never asked for it, and the reason, 
Senator, is -- 

CHAIRMAN BURTON: Counsel disagrees. 

MR. MURPHY: I major disagree, your Honor. 

MR. KIRBY: I appreciate that. When I finish my 
position, he can -- 

CHAIRMAN BURTON: Wait. You don't have to 
finish. He's disagreeing with the point you made. I think it 
was time, place, and date. 

I'd like to do that, and then I'd like to tell 
you what else that I want to do. And I'll tell you what my 
predilection is if this thing isn't resolved. If I've got to 
err on the side of something, I am not erring on the side of 
Enron. 

MR. MURPHY: Your Honor, Chairperson Burton, the 
transcript; the transcript. 

CHAIRMAN BURTON: There still is a vacancy on the 
Supreme Court. 

MR. MURPHY: The transcript says, by Mr. Kirby, 
"We have some 30,000 documents to be produced and we have 
rented a repository in Sacramento." 

That is the information we had until the lawsuit 
was filed and the declaration was given. Never, not once, were 
we told it was at 400 Capitol Mall, Suite 900. We were never 
told that they had been produced or where they were until the 
lawsuit -- 

CHAIRMAN BURTON: What was the date of that, 



34 



Dennis? 

MR. MURPHY: I think this is the transcript. 
It's July 11th, I believe. 

MR. KIRBY: Which is the day the lawsuit was 
filed. 

MR. MURPHY: It was the July 11th hearing before 
the Select Committee. 

Now, let's just make this as black and white — 

CHAIRMAN BURTON: Let me stick with my stuff. 
It's much more interesting. 

SENATOR DUNN: And whenever, if. I may, Mr. Chair. 
I want to add one additional thing that I was going to say to 
Senator Johnson. 

This dispute could certainly go on, but in the 
recommendation that I read earlier, there's a savings clause, 
Senator Johnson. It says that if in the next two weeks Enron 
starts producing the nonprivileged documents, and provides the 
privilege log, and a declaration stating they have done so, the 
sanctions abate. And if in fact that's true -- 

CHAIRMAN BURTON: I haven't gotten to this point 
yet, but how about if they don't produce them in the next two 
weeks, the sanctions kick in? 

SENATOR DUNN: That's what the recommendation is. 

CHAIRMAN BURTON: No, abating means that they 
started and are stopping. Kicking in means they've got a 
two-week period to do it before they get one, two, four, eight, 
sixteen, thirty-two, sixty-four, hike. 

SENATOR DUNN: And the reason that I would say to 



35 

start them now and abate them, Mr. Chair, is we have six months 
that have gone by -- 

CHAIRMAN BURTON: Two weeks ain't going to kill 
us. I mean, what we want is the information. 

SENATOR DUNN: Yes, that's correct. 

CHAIRMAN BURTON: I would like, with or without 
your high priced lobbyists, with our counsel, with the Senator, 
and I would like Senator Morrow to be there as well, we can make 
a committee room available and privacy, even this one, and see 
what you can do. 

And we can come back, because basically under 
this procedure, we can do something this afternoon and vote on 
it this afternoon. We can do something this afternoon and vote 
on it tomorrow. We can do something tomorrow and vote on it 
tomorrow. 

We don't necessarily want to get into this, but I 
just say to you, sir. My inclination, absent something, would 
be to vote for the contempt. And I would, as opposed to doing, 
you know, start the clock now and abating in two weeks, I would 
probably start it in two weeks, but maybe a little bit heavier. 

It's lost on me why all these other groups did 
something and you didn't. And I don't think their lawyers were 
dumber than you. I don't know if they had less to hide that 
were trade secrets. I don't know if they were afraid of 
something and you're not. 

But basically, that would be my suggestion to the 
Committee. And to have Dennis and Bion there, our lawyers, and 
then come back. Because I think I understand this as well as 



36 



I'm going to be able to understand this. 

That's kind of my inclination, Senator Johnson. 
I would think I'm just kind of at a lost as to why we're here, 
or how we got here. 

SENATOR JOHNSON: I am as well. The thought that 
we might reconvene at some later point today, but in the 
meantime, that these parties will sit down and try and actually 
go through a meet and confer process, and decide on a protective 
order. 

MR. KIRBY: Senators, we're willing to do that. 
That's why I've been trying to schedule that meeting. 

SENATOR JOHNSON: Mr. Chairman, that seems to me 
to be the wisest course for us to follow at this point. See if 
they can come up with a protective order that they can agree 
on. 

MR. MURPHY: Chairman Burton, could we have them 
agree on the record that they will produce the non-trade secret 
documents whether we agree or don't agree on their protective 
order? 

CHAIRMAN BURTON: Well, no. Here's the deal, 
Dennis, is that they will agree or not agree, whatever comes 
out. And if a majority of the Committee is not happy with what 
they did, they will be found in contempt, and there will be 
sanctions . 

So, they don't have to agree or not to agree to 
something right now. It's all going to be in a package. And if 
they don't go for it, and we think that they are being 
contemptible of the process and the powers of the Senate, we 



37 



will hold them in contempt or not, depending on what a majority 
of the Members of the Committee and the Senate want to do. 

But my feeling is, if something doesn't happen, 
that I probably, unless somebody can prove otherwise, will vote 
for it. But I think it's not going to start something tomorrow 
and abate it in two weeks. You'd have two weeks to think about 
something. 

SENATOR JOHNSON: Can I ask one final question? 
Is there an additional hearing scheduled before Judge Kobayashi? 

MR. KIRBY: There is a hearing next Wednesday, 
your Honor, which we have — 

CHAIRMAN BURTON: You know, that just absolutely 
derogates any authority. 

MR. KIRBY: — which we have offered to take off 
calendar and withdraw if we get the protective order entered and 
get the issues resolved here. 

SENATOR JOHNSON: I just would hope that all the 
parties, the staff — I hope that cooler heads will prevail. 
And when we reconvene, that there will be an agreement on a 
protective order. 

SENATOR DUNN: We've been trying for six months, 
Senator. 

SENATOR JOHNSON: With respect, I don't think 
you've been trying too hard since Judge Kobayashi ' s order. 

CHAIRMAN BURTON: Bion. 

MR. GREGORY: I just want to clarify what that 
hearing next week is. It has nothing to do with the protective 
order. It's dealing with another motion of Enron to enjoin the 



38 



Senate of the State of California from finding them in contempt. 

SENATOR JOHNSON: I understand. 

MR. GREGORY: It's a totally different issue. 

SENATOR JOHNSON: I understand, and the 
representative of Enron just said if they have a protective 
order, they're willing to fore go that. 

Again, Mr. Chairman, or your Honor, I think you 
expressed it correctly. I hope that during the course of today, 
cooler heads are going to prevail. 

And the last thing that I think we should want, 
as I mentioned earlier, is to precipitate some big battle with 
the courts in this state over these kinds of issues. 

The Judge has said they're entitled to a 
protective order. I think we need due diligence to see that 
that agreement's hammered out. 

SENATOR DUNN: And Senator Johnson, I don't 
disagree with you at all. 

Also, remember that we've got a company that has 
documents outside of any protective order that they flatly 
refused for six months — 

CHAIRMAN BURTON: We understand the issue, 
Senator. I think that you ought to try to find Senator Morrow. 
I think that you ought to find a room. 

Have you guys got a conference room, Bion? 

MR. GREGORY: Yes. 

CHAIRMAN BURTON: All right, in Leg. Counsel's 
conference room you can convene, get on the roll. 

Basically, I just say to you that you may be 



39 

bluffing with no pair. 

I want this worked out, but I'm fully prepared to 
find Enron in contempt. I'm fully prepared to do sanctions. 
But I would give you a couple weeks to think about it. 

SENATOR DUNN: Could we use conference room 
outside your office? It gives me easiest access to the Floor 
and the meeting. 

CHAIRMAN BURTON: Sure. 

All right, it will be in Room 211. 

The Committee on Rules is in recess at the call 
of the Chair. 

[Thereupon this portion of the 
Senate Rules Committee hearing 
was terminated at approximately. 
10:05 A.M. ] 

— ooOoo — 



40 

CERTIFICATE OF SHORTHAND REPORTER 

I, EVELYN J. MIZAK, a Shorthand Reporter of the State 
of California, do hereby certify: 

That I am a disinterested person herein; that the 
foregoing transcript of the Senate Rules Committee hearing was 
reported verbatim in shorthand by me, Evelyn J. Mizak, and 
thereafter transcribed into typewriting. 

I further certify that I am not of counsel or 
attorney for any of the parties to said hearing, nor in any way 
interested in the outcome of said hearing. 

IN WITNESS WHEREOF, I have hereunto set my hand this 



/ S* day of ^A^pXl^h^O , 2001 




VELYN J./MIZAKP) 



EVELYN 



Shorthand Reporter 



13 J^ " 



438-R 
Additional copies of this publication may be purchased for $3.00 per copy 
(includes shipping and handling) plus current California sales tax. 

Senate Publications 

1020 N Street, Room B-53 

Sacramento, CA 95814 

(916)327-2155 

Make checks payable to SENATE RULES COMMITTEE. 
Please include Stock Number 438-R when ordering. 



2HAf >